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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Draw a demand curve for turkey. In your diagram, show a price of turkey and the consumer surplus at that price. Explain in words what this consumer surplus measures.

To determine
The consumer surplus and demand curve for turkey.

Explanation

The equilibrium price is determined by the demand for the cost and the supply of cost normally. The consumer surplus can be explained as the difference between the highest price that the consumer is willing to pay and the actual price that the consumer pays. The difference between these two prices is known as the surplus to the consumer.

Thus, when the willing price is higher than the actual price, there will be consumer surplus. There will be no consumer surplus when the willing price is lower than the actual price. The simple demand curve for turkey can be drawn as follows:

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