-The figure above shows Clara's demand for CDs. If the price of a CD were to increase from $15 to $25, Clara's total consumer surplus for all the CDs she buys would
A) decrease by $40.
B) remain unchanged.
C) decrease by $90.
D) increase by $80.

Question

-The figure above shows Clara's demand for CDs. If the price of a CD were to increase from $15 to $25, Clara's total consumer surplus for all the CDs she buys would
A) decrease by $40. 
B) remain unchanged. 
C) decrease by $90. 
D) increase by $80.

Quizplus · Accepted Answer

The correct answer is A.The consumer surplus is the difference between the price a consumer is willing to pay for a good and the price they actually pay. In this case, Clara's demand curve shows that she is willing to pay $25 for a CD. However, the price of a CD is only $15. This means that Clara has a consumer surplus of $10 for each CD she buys. If the price of a CD were to increase to $25, Clara's consumer surplus would decrease by $10 for each CD she buys. Since Clara buys 4 CDs, her total consumer surplus would decrease by $40.

-The Figure Above Shows Clara's Demand for CDs