A consumer has quasilinear preferences over a single good


A consumer has quasilinear preferences over a single good and money, with demand function x(p) = max{15 - p/2, 0} for the good.

1) How much money would the consumer be willing to pay to gain access to a market for the good with uniform price $10 per unit?

2) How much does consumer surplus change if the price of the good rises from $10 to $14?

3) A monopolist controls the (uniform) price p of the good in the market, and can also charge a tariff T to enter the market. Suppose all consumers in the market have the same preferences as the consumer considered above. What combination of p and T maximizes the monopolist's profits?

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Business Economics: A consumer has quasilinear preferences over a single good
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