b. Due to the increase in price, consumer surplus O rises by less than $50. O rises by more than $50. falls by less than $50. O falls by more than $50.

Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter5: Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 15PAE
icon
Related questions
Question
Please help
b. Due to the increase in price, consumer surplus
O rises by less than $50.
O rises by more than $50.
O falls by less than $50.
O falls by more than $50.
Transcribed Image Text:b. Due to the increase in price, consumer surplus O rises by less than $50. O rises by more than $50. O falls by less than $50. O falls by more than $50.
Use the diagram below to answer the following questions. Assume an initial market price of $4.
a. Identify the initial area of consumer surplus (CS1) when the market price is $4. Next, assume that supply decreases and the market
price rises to $5. Draw the new supply curve and then identify the new area of consumer surplus (CS2).
Instructions: (1) Use the tool provided 'CS1' to identify the initial area of consumer surplus. This will drop a small triangle with three
endpoints onto the graph. Drag the endpoints to the appropriate position to identify the initial area of consumer surplus. (2) Then use
the tool provided 'S2' to draw the new supply curve. (3) Use the tool provided 'CS2' and follow the same process as before to identify
the second area of consumer surplus.
$10
Tools
$9
$8
CS,
CS2
$7
$6
S2
$5
$4
$3
$2
$1
D,
10 20 30 40 50 60 70 80 90 100
Quantity
Price
Transcribed Image Text:Use the diagram below to answer the following questions. Assume an initial market price of $4. a. Identify the initial area of consumer surplus (CS1) when the market price is $4. Next, assume that supply decreases and the market price rises to $5. Draw the new supply curve and then identify the new area of consumer surplus (CS2). Instructions: (1) Use the tool provided 'CS1' to identify the initial area of consumer surplus. This will drop a small triangle with three endpoints onto the graph. Drag the endpoints to the appropriate position to identify the initial area of consumer surplus. (2) Then use the tool provided 'S2' to draw the new supply curve. (3) Use the tool provided 'CS2' and follow the same process as before to identify the second area of consumer surplus. $10 Tools $9 $8 CS, CS2 $7 $6 S2 $5 $4 $3 $2 $1 D, 10 20 30 40 50 60 70 80 90 100 Quantity Price
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Market Demand
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Microeconomics A Contemporary Intro
Microeconomics A Contemporary Intro
Economics
ISBN:
9781285635101
Author:
MCEACHERN
Publisher:
Cengage
Survey Of Economics
Survey Of Economics
Economics
ISBN:
9781337111522
Author:
Tucker, Irvin B.
Publisher:
Cengage,
MACROECONOMICS FOR TODAY
MACROECONOMICS FOR TODAY
Economics
ISBN:
9781337613057
Author:
Tucker
Publisher:
CENGAGE L
Economics For Today
Economics For Today
Economics
ISBN:
9781337613040
Author:
Tucker
Publisher:
Cengage Learning
Exploring Economics
Exploring Economics
Economics
ISBN:
9781544336329
Author:
Robert L. Sexton
Publisher:
SAGE Publications, Inc
Microeconomics
Microeconomics
Economics
ISBN:
9781337617406
Author:
Roger A. Arnold
Publisher:
Cengage Learning