Figure 4.3 Domestic Market for Gasoline in the United States
-Figure 4.3 represents the domestic market for gasoline in the United States.What is the consumer surplus in this market?

Question

Figure 4.3 Domestic Market for Gasoline in the United States  ​
-Figure 4.3 represents the domestic market for gasoline in the United States.What is the consumer surplus in this market?

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good and the actual price they pay. In this graph, the demand curve represents the maximum price consumers are willing to pay for each quantity of gasoline. The equilibrium price is $2 per gallon and the quantity demanded is 80 gallons. To find consumer surplus, we need to find the area under the demand curve but above the equilibrium price (shaded in blue). This area is a triangle with a base of 80 gallons and a height of $2 per gallon, which gives us a consumer surplus of $60. Therefore, the correct answer is C.

Figure 43 Domestic Market for Gasoline in the United States