Now, suppose another buyer, Sharon, enters the market for hyperbaric chambers, and her willingness to pay is $250,000.

Based on Sharon's and Paolo's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol). Next, shade Paolo's consumer surplus using the green rectangle (triangle symbols), and shade Sharon's consumer surplus using the purple rectangle (diamond symbols).

**Note**: Plot your points as a step function in the order in which you would like them connected. Line segments will connect the points automatically.

Demand CurvePaolo's Consumer SurplusSharon's Consumer Surplus012345400350300250200150100500PRICE (Thousands of dollars)QUANTITY (Hyperbaric chambers)Market Price

To plot the market demand curve and consumer surplus for both Paolo and Sharon, we first need to clarify the details and follow a step-by-step approach:

### Step-by-Step Breakdown:

#### **1. Market Demand Curve:**
- The market demand curve represents the willingness to pay of all buyers in the market.
- **Paolo's willingness to pay**: $200,000.
- **Sharon's willingness to pay**: $250,000.

The demand curve is typically represented as a step function, where each step reflects the addition of a new consumer in the market. Based on the information provided:

- At a price of $250,000 (the highest price point), both Paolo and Sharon will purchase a hyperbaric chamber. So, the demand is at a quantity of **2** (since we have two consumers now).
- At a price of $200,000 (Paolo's willingness to pay), only Paolo would buy. So, the demand is at a quantity of **1**.

Thus, the market demand curve steps from a quantity of **1** at a price of **$200,000** to a quantity of **2** at a price of **$250,000**.

#### **2. Consumer Surplus:**
- **Paolo's Consumer Surplus**: This is the difference between what Paolo is willing to pay ($200,000) and the market price, which is the price at which the last unit is sold (assuming Paolo buys at the market price). 
- **Sharon's Consumer Surplus**: This is the difference between what Sharon is willing to pay ($250,000) and the market price.

Assuming the **market price** is set at **$200,000**, the consumer surplus calculations will be as follows:
- Paolo's consumer surplus: The area of the rectangle with height = ($200,000 - $200,000) = $0 (because Paolo’s willingness to pay equals the market price).
- Sharon's consumer surplus: The area of the rectangle with height = ($250,000 - $200,000) = $50,000, and width = 1 unit (since Sharon is the second buyer). This results in a consumer surplus of **$50,000**.

#### **3. Plot Points:**
Here is how to plot the demand curve and consumer surpluses:

- **Market Demand Curve**: Step-function with points at:
  - (1, $200,000) – Paolo’s demand.
  - (2, $250,000) – Sharon’s demand.
- **Paolo’s Consumer Surplus**: This will be shaded using the green triangle or rectangle symbol under the demand curve at the point where the market price equals $200,000.
- **Sharon’s Consumer Surplus**: This will be shaded using the purple rectangle or diamond symbol between the $250,000 price point and the $200,000 price level for a quantity of 1 (representing Sharon).

### Let's begin by plotting this on the graph.

I can walk you through how to visualize it or generate the plot if needed. Would you like me to proceed with that?

Now, suppose another buyer, Sharon, enters the market for hyperbaric chambers, and her willingness to pay is $250,000. Based on Sharon's and Paolo's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol). Next, shade Paolo's consumer surplus using the green rectangle (triangle symbols), and shade Sharon's consumer surplus using the purple rectangle (diamond symbols).

Learn how to plot a market demand curve and calculate consumer surplus for two buyers, Paolo and Sharon, in the hyperbaric chamber market. This problem covers demand curve construction, consumer surplus calculation, and step functions, suitable for high school economics students.

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