If a boxing fight is shown on pay-per-view television every Saturday at 4pm, the demand curve for each fight is given below. If viewing a fight were free to anyone who tuned in, total economic surplus would be ________.

Question

If a boxing fight is shown on pay-per-view television every Saturday at 4pm, the demand curve for each fight is given below.  If viewing a fight were free to anyone who tuned in, total economic surplus would be ________.

Quizplus · Accepted Answer

Economic surplus is given by the area of the triangle under the demand curve up to the equilibrium quantity. If viewing a fight were free, there would be 50 million viewing households, so economic surplus would be 1/2 ($25 × 50M)= $625M.

If a Boxing Fight Is Shown on Pay-Per-View Television Every