Thandi Loves Toffees A Use This Information to Construct Thandi's Demand Curve for Places

question 8

Essay

Thandi loves toffees. The table shown reflects the value Thandi places on each toffee she eats:
$\begin{array}{|l|l|}\hline \text { Value of first toffee } & \text { R0.60 } \\\hline \text { Value of second toffee } & \text { R0.50 } \\\hline \text { Value of third toffee } & \text { R0.40 } \\\hline \text { Value of fourth toffee } & \text { R0.30 } \\\hline \text { Value of fifth toffee } & \text { R0.20 } \\\hline \text { Value of sixth toffee } & \text { R0.10 }\\\hline\end{array}$
a. Use this information to construct Thandi's demand curve for toffees.
b. If the price of toffees is R0.20, how many toffees will Thandi buy?
c. Show Thandi's consumer surplus on your graph. How much consumer surplus would she have at a price of R0.20?
d. If the price of toffees rose to R0.40, how many toffees would she purchase now? What would happen to Thandi's consumer surplus? Show this change on your graph.

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Definitions:

Substitute Goods

Products or services that can be used in place of each other, where an increase in price for one leads to an increase in demand for the other.

Good Faith

A principle of honesty and sincerity of intention in one's actions, especially in contractual or negotiation contexts.

Implied Warranty of Merchantability

A legal presumption that a product will meet the reasonable expectations of quality and performance for goods of its kind.

Bicycle Merchant

A retailer specialized in the sale and service of bicycles and related accessories.