F. Flinstone has quasilinear preferences and his inverse demand function for Brontosaurus Burgers is P(b)= 30-2b. Mr. Flintstone is currently consuming 10 burgers at a price of 10 dollars.

Question

(a) How much money would he be willing to pay to have this amount rather than no burgers at all? What is his level of (net) consumer's surplus?
(b) The town of Bedrock, the only supplier of Brontosaurus Burgers, decides to raise the price from $10 a burger to $14 a burger. What is Flintstone's change in consumer surplus?

Answer 1

Since quasilnear preferences is a special case of a utility function Then...
u(x,y) = v(x) + y
Taking the derivative and setting to zero, a condition for maximizing utility is
v’(x) - p = 0 or p(x) = v’(x)
p(x) vs x as inv demand function