Use the following to answer question:
Figure: Monthly Demand for Ice Cream Cones
-(Figure: Monthly Demand for Ice Cream Cones) The graph Monthly Demand for Ice Cream Cones shows one individual's monthly demand for ice cream cones. At $5 per cone, this individual will consume 10 cones in a month. How much consumer surplus does this consumer receive?
A) $100
B) $50
C) $150
D) $500

Question

Use the following to answer question:
Figure: Monthly Demand for Ice Cream Cones 
-(Figure: Monthly Demand for Ice Cream Cones) The graph Monthly Demand for Ice Cream Cones shows one individual's monthly demand for ice cream cones. At $5 per cone, this individual will consume 10 cones in a month. How much consumer surplus does this consumer receive?
A) $100 
B) $50 
C) $150 
D) $500

Quizplus · Accepted Answer

Consumer surplus is the area between the demand curve and the price level, up to the quantity consumed. If the price is $5 and the individual consumes 10 cones, the consumer surplus is the area of the triangle with a base of 10 cones and a height equal to the difference between the maximum price the consumer is willing to pay and the actual price ($5). If the maximum price is $10, the height is $5, so the consumer surplus is 0.5 * 10 * 5 = $25. However, if the maximum price is $15, the height is $10, so the consumer surplus is 0.5 * 10 * 10 = $50.

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