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2. The effect of transaction costs on decision-making Aa Aa This Wendys commercial confuses the notions of appreciation and consumer surplus. Recall that consumer surplus is the difference between what a consumer is willing to pay for a good and what he or she actually pays for it According to standard economic theory, consumer surplus must always be We often simplify economic models by ignoring the role that transaction costs play in our decision-making Purchasing a good often involves explicit transaction costs, such as the cost of the gasoline used to get to the store, but there are also implicit transaction costs such as the opportunity cost of the time spent shopping for and acquiring a product. The remaining questions will help you understand the importance of transaction costs Suppose Yvette values consuming her first Double Stack burger at 2, and she places no value on any additional burgers. Based on Yvettes willingness to pay, her demand curve is plotted on the graph below. For simplicity assume there is no time cost of waiting in line for her first Double Stack burger. Shade the area representing her consumer surplus from purchasing a burger under these conditions using the green rectangle (triangle symbols)PRICE (Dollars per burgerl Consumer Surplus Demand Price 1 X QUANTITY Double Stack burgers Help Clear AllSuppose Yvette just sat down to enjoy the Double Stack burger that she purchased for $1. Her friend, Jack, would also like a Double Stack burger, but he strongly dislikes standing in line. Jack offers to buy Yvettes Double Stack rather than wait in line himself and pay $1 The table below shows some hypothetical offers Jack might make for Yvettes burger. First, compute the consumer surplus Yvette gets from buying the burger for $1, refusing Jacks offer, and eating the burger, and enter it in the table below. Next, compute and enter the consumer surplus she gets from buying the first burger at $1, selling it to Jack at each price listed below, purchasing another burger for $1, and consuming it. Again, assume that Yvettes cost of waiting in line for a burger is zero.Yvettes Consumer Surplus from.. Purchasing and Consuming Immediately Purchasing, Selling, Purchasing Again, Then Consuming Offer Price from Friend $1.25 $1.75 $%2.25 Notice that if Yvette is willing to sell her burger to Jack while at the Wendys restaurant, she would purchase another burger immediately, since the value of the burger ($2) remains higher than the price of the burger ($1) Assuming her cost of waiting in line is zero, whats the lowest of the offers listed in the table that she would accept in exchange for her burger? O $1.75 $2.25 O $1.25Lets relax the assumption that Yvettes cost of waiting for a Double Stack is zero. Specifically, Yvette values each minute of her time at $0.25. Suppose the wait for a Double Stack is 2 minutes. Considering the value of her time, the cost of obtaining a burger for Yvette is the prices listed below, whats the lowest price she would accept from Jack in exchange for her burger? , and her consumer surplus from purchasing and consuming a burger is . Of O $2.75 O $2.25 O $1.75 O $1.25 From the above analysis, you can conclude that the minimum price at which Yvette is willing to sell her Double Stack burger to Jack the longer she has to wait in line.could you help me do this question?

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