Use the following to answer questions:
Figure: Quantity of Good X
-(Figure: Quantity of Good X) Refer to the figure. As the price falls from $200 to $100, consumer surplus changes by:
A) $5,000.
B) $10,000.
C) $12,500.
D) -$25,000.

Question

Use the following to answer questions:
Figure: Quantity of Good X 
-(Figure: Quantity of Good X) Refer to the figure. As the price falls from $200 to $100, consumer surplus changes by:
A) $5,000. 
B) $10,000. 
C) $12,500. 
D) -$25,000.

Quizplus · Accepted Answer

Consumer surplus is represented by the triangle above the price and below the demand curve, i.e. the shaded area in the graph. When price falls from $200 to $100, the quantity demanded increases from 40 to 80. So, the new consumer surplus is:

(1/2) x (80-40) x (200-100) = $12,500.

Therefore, consumer surplus changes by $12,500 - $0 = $12,500.

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