How many Burritos would I buy.

(1) The price of Steak Burritos in Chipotle here in Davis is $5.50 . I would be willing to pay $10 Show more (1) The price of Steak Burritos in Chipotle here in Davis is $5.50 . I would be willing to pay $10 dollars for the first Steak Burrito $8 for the second $6.00 for the third $4.00 for the fourth and nothing for the fifth or more burritos . a. How many Burritos would I buy. (Ignore taxes here) b. Compute my total consumer surplus and illustrate using a graph. c. If the price of steak burritos fall to $3.00 how many burritos would I buy and what is change in my total consumer surplus compared to the situation in b. Illustrate using a graph. (2)Now the following demand function for good 1 : q1= 20-2p1+4Y (a) Initially the equilibrium price is $=2 and income is $10. What is the total consumer surplus at equilibrium point? What if the demand function is q1=p1^-2Y (b) If the government imposes consumption tax on the good that raised prices by $1 by how much will the consumers surplus change? (c) Show the relationship between EV CV and consumer surplus using compensated and uncompensated demand curves. (d) If you your income is $ 1millionyou spend $100 on good 1 and income elasticity was 0.02 does it matter whether you use EV CV or consumer surplus to measure the change in consumer welfare in (b). Show less

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