# a) How to draw the implied stair-case demand and supply curves? b) If the equilibrium price is $6 per driveway how many households would like their driveways shovelled and how many teenagers will be willing to shovel driveways? ## Seven households on your street are interested in having their driveways shovelled, and their willingness to pay values (demand) are:$14, $12,$10, $8,$6, $4,$2. At the same time, each of six teenagers is willingness to shovel snow from one driveway each day. Their "willingness to shovel" valuations (supply) are: $2,$3, $4,$5, $6, and$7. How to compute the consumer surplus and the producer surplus? How much do households actually pay to have their driveways shovelled?

Nov 18, 2016

Total Consumer's surplus is =8+6+4+2+0=$.20 Total Worker's surplus =4+3+2+1+0=$10

#### Explanation: Here -

The consumer's surplus is the difference between the price consumers is willing to pay and the equilibrium price.

Consumer's surplus for the first person $= 14 - 6 = 8$
Consumer's surplus for the second person $= 12 - 6 = 6$
Consumer's surplus for the third person $= 10 - 6 = 4$
Consumer's surplus for the fourth person $= 8 - 6 = 2$
Consumer's surplus for the fifth person $= 6 - 6 = 0$

Total Consumer's surplus is =8+6+4+2+0=$.20 The worker's surplus is the difference between the equilibrium price and the price teenager is willing to accept. Worker's surplus for the first person $= 6 - 2 = 4$Worker's surplus for the second person $= 6 - 3 = 3$Worker's surplus for the Third person $= 6 - 4 = 2$Worker's surplus for the fourth person $= 6 - 5 = 1$Worker's surplus for the fifth person $= 6 - 6 = 0$Total Worker's surplus =4+3+2+1+0=$10

How much do households actually pay to have their driveways shovelled?

Households actually pay to have their driveways shovelled = 5 xx $6=$.30

What is the value of household's total willingness to pay?
The value of household's total willingness to pay=14+12+10+8+6=\$50