-Refer to Exhibit E-4, which represents Chad's demand for bicycle rentals. If the bicycle rental equilibrium price is $4 an hour, Chad's total consumer surplus is
A) $0
B) $2
C) $4
D) $6
E) $8

Question

-Refer to Exhibit E-4, which represents Chad's demand for bicycle rentals. If the bicycle rental equilibrium price is $4 an hour, Chad's total consumer surplus is
A) $0 
B) $2 
C) $4 
D) $6 
E) $8

Quizplus · Accepted Answer

Chad's total consumer surplus is the area above the price line and below the demand curve up to the quantity he rents. At a $4 rental price, he rents 3 hours of bicycle use. The area of the triangle representing his consumer surplus is 1/2 * base * height = 1/2 * 3 * 4 = 6.

-Refer to Exhibit E-4, Which Represents Chad's Demand for Bicycle