Exhibit 6-18
-On a normal day, Emily Mapai's demand curve for a cup of hot chocolate is initially shown as D in Exhibit 6-18. On a day when the high temperature does not get above zero degrees, her demand curve increases to D'. At a price P for a cup of hot chocolate, Emily's consumer surplus on a freezing day
A) cannot be determined without calculating an exact marginal valuation
B) increases a great deal over her consumer surplus on a normal day
C) will vary depending on whether hot chocolate is a normal or an inferior good
D) increases only if her demand curve is unit-elastic
E) decreases a great deal over her consumer surplus on a normal day

Question

Exhibit 6-18 
-On a normal day, Emily Mapai's demand curve for a cup of hot chocolate is initially shown as D in Exhibit 6-18. On a day when the high temperature does not get above zero degrees, her demand curve increases to D'. At a price P for a cup of hot chocolate, Emily's consumer surplus on a freezing day
A) cannot be determined without calculating an exact marginal valuation 
B) increases a great deal over her consumer surplus on a normal day 
C) will vary depending on whether hot chocolate is a normal or an inferior good 
D) increases only if her demand curve is unit-elastic 
E) decreases a great deal over her consumer surplus on a normal day

Quizplus · Accepted Answer

When the temperature drops and her demand curve shifts to the right (D'), her willingness to pay for a cup of hot chocolate increases, which leads to an increase in consumer surplus. Therefore, her consumer surplus on a freezing day will increase a great deal over her consumer surplus on a normal day.

Exhibit 6-18 -On a Normal Day, Emily Mapai's Demand Curve for a Curve