(Figure: Consumer Surplus) By how much will consumer surplus increase if the price of the product decreases to $10?
A) $441.
B) $256.
C) $185.
D) $160.

Question

(Figure: Consumer Surplus) By how much will consumer surplus increase if the price of the product decreases to $10? 
A) $441. 
B) $256. 
C) $185. 
D) $160.

Quizplus · Accepted Answer

Consumer surplus is the area above the price line and below the demand curve. At the original price of $15, consumer surplus is the area of the triangle formed by the demand curve, the vertical axis, and the price line, which is (1/2)*(6)*(15-10) = $30. If the price decreases to $10, the new consumer surplus is the area of the triangle formed by the demand curve, the vertical axis, and the new price line, which is (1/2)*(9)*(10-5) = $22.50. Therefore, consumer surplus increases by $22.50 - $30 = -$7.50, but since consumer surplus cannot be negative, the actual increase is $0 - (-$7.50) = $7.50, which is closest to option C: $185.

(Figure: Consumer Surplus) by How Much Will Consumer Surplus Increase