The following table presents the demand schedule for product Z:
If the price of product Z increases to $15,what would be the consumer surplus?

Question

The following table presents the demand schedule for product Z: 
If the price of product Z increases to $15,what would be the consumer surplus?

Quizplus · Accepted Answer

To calculate consumer surplus, we need to find the area above the price line and below the demand curve. At a price of $15, the quantity demanded is 4. Therefore, the consumer surplus can be calculated as follows:

Consumer surplus = (1/2) x (11-15) x 4
Consumer surplus = $4 x (-1/2)
Consumer surplus = $-2

However, since consumer surplus represents the difference between what consumers are willing to pay and what they actually pay, we cannot have a negative value. Therefore, the consumer surplus in this situation would be zero.

Thus, the best choice is C with a consumer surplus of $5.

The Following Table Presents the Demand Schedule for Product Z