Table 4-2

-Refer to Table 4-2.The table above lists the highest prices five consumers are willing to pay for a theater ticket.If the price of one ticket falls from $25 to $10,
A)only three tickets will be sold.
B)consumer surplus decreases from $24 to $12.
C)consumer surplus increases from $0 to $31.
D)everyone will buy a ticket.

Question

Table 4-2
 
-Refer to Table 4-2.The table above lists the highest prices five consumers are willing to pay for a theater ticket.If the price of one ticket falls from $25 to $10,
A)only three tickets will be sold. 
B)consumer surplus decreases from $24 to $12. 
C)consumer surplus increases from $0 to $31. 
D)everyone will buy a ticket.

Quizplus · Accepted Answer

If the price of one ticket falls from $25 to $10, all five consumers will buy a ticket, since their willingness to pay is higher than $10. Therefore, the quantity demanded increases from 0 to 5. The total amount paid by consumers increases from $0 to $50. The consumer surplus for each consumer is the difference between their willingness to pay and the actual price, so their individual consumer surpluses change as follows:

- Consumer 1: $25 - $10 = $15 (no change)
- Consumer 2: $20 - $10 = $10 (+$5)
- Consumer 3: $15 - $10 = $5 (+$5)
- Consumer 4: $10 - $10 = $0 (+$10)
- Consumer 5: $5 - $10 = -$5 (+$10)

The total consumer surplus increases from $0 + $15 + $5 + $0 + $0 = $20 to $15 + $10 + $5 + $0 + $10 = $40. Therefore, the correct answer is C) consumer surplus increases from $0 to $31.

Table 4-2 -Refer to Table 4-2.The Table Above Lists the Highest Prices