Overview
Kyra buys an iPhone for $360 and gets consumer surplus of $240.
a. What is her willingness to pay?
b. If she had bought the iPhone on sale for $270, what would her consumer surplus have been?
c. If the price of an iPhone were $750, what would her consumer surplus have been?
2. An early freeze in California sours the lemon crop. Explain what happens to consumer surplus in the market for lemons. Explain what happens to consumer surplus in the market for lemonade. Illustrate your answers with diagrams.