-The figure above shows the market for umbrellas in Sunville. Suppose the quantity of umbrellas currently traded in Sunville is 199 per day. If one more umbrella is sold, the total surplus in Sunville will
A) decrease by $26.67.
B) increase by $26.67.
C) increase by $50.00.
D) not change.

Question

-The figure above shows the market for umbrellas in Sunville. Suppose the quantity of umbrellas currently traded in Sunville is 199 per day. If one more umbrella is sold, the total surplus in Sunville will
A) decrease by $26.67. 
B) increase by $26.67. 
C) increase by $50.00. 
D) not change.

Quizplus · Accepted Answer

The total surplus increases when one more unit is sold if the marginal benefit (demand) exceeds the marginal cost (supply) for that unit. The increase in total surplus is the difference between the marginal benefit and marginal cost for the 200th umbrella, which is $26.67.

-The Figure Above Shows the Market for Umbrellas in Sunville