Simple last question about Change in surplus?

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3.1. Area A represents the consumer surplus when the market price is _______.

A. $60



B. $100



C. $80



D. $120



What does area B (the gray shaded area) represent?



A. Total consumer surplus when the market price is $80



B. The change in total consumer surplus when the market price changes from $80 to $60



C. Total consumer surplus when the market price is $60



D. The change in total consumer surplus when the market price changes from $40 to $60Simple last question about Change in surplus?
C

B



COnsumer surplus is teh area under the demand curve but above the price. If a producer sold/auctioned each unit one by one, then they would get the whole area under the demand curve. (First sell to Alan, then second unit to Paul...) But since the same price applies to all, consumers who'd be willing to pay more enjoy a surplus.

Hence when price is 80, consumer surplus is area A, with Alan, Paul, Perkin and Kristen buying and enjoying surplus.

And C



When price falls, surplus increases as current customers get lower prices, and new customers are buying (they also have some surplus). That is, Brian can now buy, adn his surplus is the little square for the 5t unti sold and a height of 20. The erst of the grey aer go to Alan, Paul, Perkin and Kristen.

Answer BSimple last question about Change in surplus?
C $80



B. The change in total consumer surplus when the market price changes from $80 to $60Simple last question about Change in surplus?
C. $80



B. The change in total consumer surplus when the market price changes from $80 to $60