The following diagram shows Emily's demand curves for hot chocolate. On a normal day, Emily's demand curve for a cup of hot chocolate is shown as D. On a freezing day, her demand curve shifts rightward to D'. At a price P, Emily's consumer surplus on a freezing day:
Figure 6.8

A)cannot be determined without calculating her marginal valuation of a cup of hot chocolate.
B)increases significantly over her consumer surplus on a normal day.
C)will vary depending on whether hot chocolate is a normal or an inferior good.
D)increases only if her demand curve is unit-elastic.
E)decreases significantly over her consumer surplus on a normal day.

Question

The following diagram shows Emily's demand curves for hot chocolate. On a normal day, Emily's demand curve for a cup of hot chocolate is shown as D. On a freezing day, her demand curve shifts rightward to D'. At a price P, Emily's consumer surplus on a freezing day: ​
Figure 6.8
​

A)cannot be determined without calculating her marginal valuation of a cup of hot chocolate. 
B)increases significantly over her consumer surplus on a normal day. 
C)will vary depending on whether hot chocolate is a normal or an inferior good. 
D)increases only if her demand curve is unit-elastic. 
E)decreases significantly over her consumer surplus on a normal day.

Quizplus · Accepted Answer

When the demand curve shifts rightward due to a freezing day, it means that Emily is willing to pay more for a cup of hot chocolate at every price level. This increases her consumer surplus as she can enjoy the hot chocolate at a lower price than what she would have been willing to pay. Therefore, her consumer surplus on a freezing day is higher than on a normal day.

The Following Diagram Shows Emily's Demand Curves for Hot Chocolate