Suppose your weekly demand equation for Tim Hortons coffee is Q = 30 – 5P, and the price is $2/cup. Draw a demand curve and answer the following questions:
(a) How many cups of coffee will you buy per week?
(b) What is the marginal value for the last cup of coffee that you consume? What is the total value for all coffee that you consume in a week?
(c) What is your total expenditure on coffee per week? What is your consumer’s surplus? Specify the corresponding areas in your graph and calculate their size.