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Figure: Determining Surplus 3
-(Figure: Determining Surplus 3)In the graph,how much is consumer surplus?

Question

Use the following to answer questions 
Figure: Determining Surplus 3 
-(Figure: Determining Surplus 3)In the graph,how much is consumer surplus?

Quizplus · Accepted Answer

Consumer surplus is the area above the price line and below the demand curve. In this graph, consumer surplus is the triangle formed by the points (0,10), (10,5), and (10,0). The area of this triangle is (1/2)*10*5=$25. Since there are two consumers represented in the graph, the total consumer surplus is $25*2=$50. However, the graph also shows that consumers are willing to buy up to 5 units at a price of $10. But the equilibrium price is only $5, so consumers are better off than they expected and are experiencing an additional $10 of surplus per unit. This means that the total consumer surplus is $50+(5*2*$10)=$60.

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