Figure 6-4 Moira’s Consumer Surplus on Milk Consumption
Figure 6-4. Our first question to Moira is, “If you were drinking no milk
at all, how much would you be willing to pay for one litre per week?”
With no hesitation she replies, “$6.00.” We then ask, “If you had already
consumed that one litre, how much would you be willing to pay for a
second litre per week?” After a bit of thought, she answers, “$3.00.”
Adding one litre per week with each question, we discover that she
would be willing to pay $2.00 to get a third litre per week and $1.60,
$1.20, $1.00, $0.80, $0.60, $0.50, and $0.40 for successive litres from the
fourth to the tenth litre per week.
Consumer surplus on each unit consumed is the difference between
the market price and the maximum price that the consumer is willing
to pay to obtain that unit. The table shows the value that Moira puts on
successive litres of milk consumed each week. Her negatively sloped
demand curve shows that she would be willing to pay progressively
smaller amounts for each additional litre consumed. If the market price is
$1.00 per litre, Moira will buy six litres of milk per week and pay the