Figure 7-9

-Refer to Figure 7-9.If the price decreases from $22 to $16,consumer surplus increases by

Question

Figure 7-9
 
-Refer to Figure 7-9.If the price decreases from $22 to $16,consumer surplus increases by

Quizplus · Accepted Answer

To find the increase in consumer surplus, we need to calculate the area of the triangle formed by the vertical line passing through the quantity consumed at $16 and the demand curve. The base of the triangle is (18-8) = 10 units and the height is (22-16) = 6 units, so the area is (1/2)*10*6 = $30. Since the market consists of 4 identical consumers, the total increase in consumer surplus is 4*$30 = $120. Therefore, the correct answer is B.

Figure 7-9 -Refer to Figure 7-9.If the Price Decreases from $22 to Decreases