Figure 4-1

Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $1.00, what is Arnold's consumer surplus?
A)$1.00
B)$2.00
C)$3.00
D)$7.00

Question

Figure 4-1
  
Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1.If the market price is $1.00, what is Arnold's consumer surplus?
A)$1.00 
B)$2.00 
C)$3.00 
D)$7.00

Quizplus · Accepted Answer

To find Arnold's consumer surplus at a market price of $1.00, follow the point where the price intersects the demand curve and draw a line straight across to the y-axis. This shows the maximum amount Arnold is willing to pay for a burrito at this price. In this case, Arnold's maximum willingness to pay is $4.00. To find the consumer surplus, subtract the market price from the maximum willingness to pay: $4.00 - $1.00 = $3.00. Thus, Arnold's consumer surplus at a market price of $1.00 is $3.00.

Figure 4-1 Figure 4-1 Shows Arnold's Demand Curve for Burritos