Question

Look at the two tables below. What is the total surplus If Bob buys a unit from Carlos? If Barb buys a from Courtney? If Bob buys a unit from Chad? If you match up pairs of buyers and sellers so as to maximize the total surplus of all transactions, what Is the largest total surplus that can be achieved?Person Maximum Price Willing to Pay Person Minimum Acceptable PriceBob $18 Carlos $5Barb 16 Courtney 7Bill 14 Chuck 9Bart 12 Cindy 11Brent 10 Craig 13Betty 8 Chad 15A. What Is the total surplus if Bob buys a unit from Carlos?B. What is the total surplus if Barb buys a unit from Courtney?C. What is the total surplus if Bob buys a unit from Chad?D. If you match up pairs of buyers and sellers so as to maximize the total surplus of all transactions, what is the largest surplus can be achieved?

Answer 1

Explanation:

A. What Is the total surplus if Bob buys a unit from Carlos?

$ $21 - $5 = $16

B. What is the total surplus if Barb buys a unit from Courtney?

$16 - $7 = $9

C. What is the total surplus if Bob buys a unit from Chad?

$16 - $15 = $1

D. If you match up pairs of buyers and sellers so as to maximize the total surplus of all transactions, what is the largest surplus can be achieved?

Arrange both tables in order to get from the least to the greatest and subtract them to get the differences.

Sum of all the differences:

$6 + $3 + $3 + $3 + $3 + $3 = $21 Total surplus (max)