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Figure: Determining Surplus 2
-(Figure: Determining Surplus 2)In the graph,how much is consumer surplus?

Question

Use the following to answer questions 
Figure: Determining Surplus 2 
-(Figure: Determining Surplus 2)In the graph,how much is consumer surplus?

Quizplus · Accepted Answer

Consumer surplus is equal to the area above the price line and below the demand curve. In this graph, consumer surplus is represented by the triangle with base 5 and height 3, so it is (1/2)(5)(3) = $7.5. Consumer surplus is also equal to the difference between the maximum amount that consumers are willing to pay (represented by the demand curve) and the market price, multiplied by the quantity sold. In this case, the maximum amount consumers are willing to pay is $8, and the market price is $5. The quantity sold is 3. So, consumer surplus is (8-5) x 3 = $9. Therefore, the total consumer surplus is $7.5 + $9 = $16.5, which is closest to answer B, $15.

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