-In the figure above, when the market is in equilibrium, total consumer surplus on all the CDs bought will be
A) $20 million.
B) less than $15 million.
C) less than at any other price.
D) greater than $30 million.

Question

-In the figure above, when the market is in equilibrium, total consumer surplus on all the CDs bought will be
A) $20 million. 
B) less than $15 million. 
C) less than at any other price. 
D) greater than $30 million.

Quizplus · Accepted Answer

At equilibrium, consumer surplus is maximized. The triangle formed by the demand curve and the equilibrium price represents the consumer surplus. The area of the triangle is 1/2 * base * height = 1/2 * 10 * 2 = $10 million. Since there are 2 million CDs bought, the total consumer surplus is 2 * $10 million = $20 million.

-In the Figure Above, When the Market Is in Equilibrium