Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below. With no subsidy, what is consumer surplus?
A)$1,000 per day
B)$4,000 per day
C)$8,000 per day
D)$9,000 per day

Question

Suppose a small island nation imports sugar for its population at the world price of $1,500 per ton. The domestic market for sugar is shown below.  With no subsidy, what is consumer surplus?
A)$1,000 per day 
B)$4,000 per day 
C)$8,000 per day 
D)$9,000 per day

Quizplus · Accepted Answer

Consumer surplus without a subsidy is ½ × ($2,500 − $1,500)× 8 = $4,000.

Suppose a Small Island Nation Imports Sugar for Its Population