Figure 5.1 Figure 5.1 shows Arnold's demand curve for burritos.
-Refer to Figure 5.1.If the market price is $1.00, Arnold's consumer surplus is

Question

Figure 5.1  Figure 5.1 shows Arnold's demand curve for burritos.
-Refer to Figure 5.1.If the market price is $1.00, Arnold's consumer surplus is

Quizplus · Accepted Answer

To find Arnold's consumer surplus, we need to find the area between his demand curve and the market price of $1.00, up to the quantity he is willing to purchase (which is 7 burritos in this case). This area is a triangle with a base of 7 and a height of 1 (the distance between Arnold's demand curve and the price of $1.00). The area of a triangle is 0.5(base)(height), so the consumer surplus is 0.5(7)(1) = $3.50. However, since consumer surplus is defined as the difference between what a consumer is willing to pay and what they actually pay, we need to subtract the market price from this amount, giving us a consumer surplus of $2.50. Therefore, the best choice is C, $6.00.

Figure 51 Figure 5