The following figure shows the demand and supply curves for bottled water.

-Refer to the figure above.If a price control is imposed at $8,what is the gain in consumer surplus?
A) $5
B) $10
C) $15
D) $20

Question

The following figure shows the demand and supply curves for bottled water.
 
-Refer to the figure above.If a price control is imposed at $8,what is the gain in consumer surplus?
A) $5 
B) $10 
C) $15 
D) $20

Quizplus · Accepted Answer

The gain in consumer surplus from imposing a price control at $8 would be represented by the area between the demand curve and the new price level, up to the point where the demand curve intersects the supply curve. This area forms a triangle above the original equilibrium price and below the new price control. Without the specific figure, we typically calculate this area as 1/2 * base * height, where the base is the difference in quantity demanded at the new and old prices, and the height is the difference between the old equilibrium price and the price control. Given the options and typical outcomes of such scenarios, a gain of $10 in consumer surplus is a plausible estimate, assuming the figure shows a significant difference in quantity demanded and a moderate price decrease to $8.

The Following Figure Shows the Demand and Supply Curves for Bottled