Table: Sweetbrand Cheesecakes
Consumer Maximum Willingness to pay for Sweetbrand Cheesecakes Fred $11.65 Sam 17.99 Merry 12.99 Piper 16.75
The table shows the maximum consumer willingness to pay for Sweetbrand cheesecakes. Which of the four consumers receives the smallest consumer surplus if the market price of the cheesecakes is $12.50 each?
Piper
Fred
Merry
Sam
To determine which consumer receives the smallest consumer surplus, we first need to calculate the consumer surplus for each individual. Consumer surplus is calculated as the difference between the maximum willingness to pay and the market price.
The market price of the cheesecakes is $12.50.
Fred:
Sam:
Merry:
Piper:
Now, let's summarize the consumer surplus for each consumer:
Since Fred has a negative consumer surplus (indicating he does not purchase the cheesecake), he effectively receives the smallest consumer surplus.
Thus, the answer is Fred.