The indifference curve approach to measuring consumer surplus will yield the same answer as the approach using areas under the demand curve if:

Question

Quizplus · Accepted Answer

If the income effect of a price change is zero, then the indifference curve approach and the approach using areas under the demand curve will yield the same answer. This is because the indifference curve approach assumes that the consumer's income and tastes do not change, and therefore the income effect is zero. In this case, the consumer's willingness to pay for a good is solely determined by the price of the good, which is the same assumption made by the approach using areas under the demand curve.

The Indifference Curve Approach to Measuring Consumer Surplus Will Yield