-Refer to Exhibit 5-3 which shows the demand and supply of a college athlete.If the college is allowed to pay this student athlete its market equilibrium wage of $10,000,what is the consumers' surplus for the college that buys this one athlete's services at this wage?
A) area 1
B) area 2
C) area 3
D) area 1 + 2

Question

-Refer to Exhibit 5-3 which shows the demand and supply of a college athlete.If the college is allowed to pay this student athlete its market equilibrium wage of $10,000,what is the consumers' surplus for the college that buys this one athlete's services at this wage?
A) area 1 
B) area 2 
C) area 3 
D) area 1 + 2

Quizplus · Accepted Answer

The consumer surplus is the area above the price level and below the demand curve. In this context, it is the area above the $10,000 wage and below the demand curve, which is area 1.

-Refer to Exhibit 5-3 Which Shows the Demand and Supply