The demand curve for new movies shown on TV is plotted in the graph below:
If the regulated pay-per-view charge is $30 per household,what would be the lost economic surplus?

Question

The demand curve for new movies shown on TV is plotted in the graph below: 
If the regulated pay-per-view charge is $30 per household,what would be the lost economic surplus?

Quizplus · Accepted Answer

To find the lost economic surplus, we need to calculate the area of the triangle that lies above the $30 price line and below the demand curve. Using the formula for the area of a triangle (0.5 x base x height), we can calculate that the lost economic surplus is equal to 0.5 x ($45 - $30) x 96 million households, which is $720 million. Therefore, the best choice is D.

The Demand Curve for New Movies Shown on TV Is