(Figure: Monthly Demand for Potato Chips) The graph Monthly Demand for Potato Chips shows one individual's linear monthly demand curve for potato chips. At $5 per bag of chips, this individual will consume 10 bags in a month. How much consumer surplus does this consumer receive?

A)$100
B)$50
C)$150
D)$500

Question

(Figure: Monthly Demand for Potato Chips) The graph Monthly Demand for Potato Chips shows one individual's linear monthly demand curve for potato chips. At $5 per bag of chips, this individual will consume 10 bags 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 difference between the maximum price a consumer is willing to pay and the actual price paid. In this case, the individual is willing to pay $7.50 for one bag of chips (as shown by the point where the demand curve intersects the vertical axis). Thus, for 10 bags, the individual is willing to pay $75. However, the actual price for 10 bags is $50 (10 x $5). Therefore, the consumer surplus is $25 ($75 - $50). The choices A, C, and D are all too high.

(Figure: Monthly Demand for Potato Chips) the Graph Monthly Demand