Figure 4-1 Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1. If the market price is $1.00, what is Arnold's consumer surplus?
A) $1.00
B) $2.00
C) $6.00
D) $7.00

Question

Figure 4-1  Figure 4-1 shows Arnold's demand curve for burritos.
-Refer to Figure 4-1. If the market price is $1.00, what is Arnold's consumer surplus?
A) $1.00 
B) $2.00 
C) $6.00 
D) $7.00

Quizplus · Accepted Answer

Arnold's consumer surplus is the area below his demand curve and above the market price. At a price of $1.00, Arnold's consumer surplus is the triangular area above the line x=0 (no burritos purchased) and below the demand curve at x=4 (Arnold's quantity demanded). This area is ½(4)($5.00 - $1.00) = $12.00/2 = $6.00.

Figure 4-1 Figure 4-1 Shows Arnold's Demand Curve for Burritos