Hint – Optimal purchase & consumer surplus
Buy slices while the next slice's marginal value (WTP) ≥ price and as long as your remaining budget allows. Consumer surplus is the sum of (WTP − price) over purchased slices.
1) Cake Slices & Consumer Surplus
Decide how many slices to buy and compute consumer surplus.
Marginal values = maximum willingness to pay (WTP) per slice. Labels: WTP₁, WTP₂, WTP₃, WTP₄.
Marginal values = maximum willingness to pay (WTP) per slice. Labels: WTP₁, WTP₂, WTP₃, WTP₄.
Enter marginal values (maximum WTP) for each slice:
Market parameters
Optimal quantity
–
Total spent
–
Consumer surplus
–