Figure 7-22
-Refer to Figure 7-22.If the price decreases from $80 to $70 due to a shift in the supply curve,consumer surplus increases by
A)$250.
B)$750.
C)$1000.
D)$500.

Question

Figure 7-22 
-Refer to Figure 7-22.If the price decreases from $80 to $70 due to a shift in the supply curve,consumer surplus increases by
A)$250. 
B)$750. 
C)$1000. 
D)$500.

Quizplus · Accepted Answer

The area of consumer surplus increases from A+B+C to A+B+C+D+E. The increase in consumer surplus is triangle D+E which has a height of 10 (difference between original and new price) and a base of 15 (difference between original and new quantity demanded). Therefore, the increase in consumer surplus is (1/2)(10)(15) = $75. Multiplying this by the increase in quantity demanded (10 units) gives a total increase in consumer surplus of $750.

Figure 7-22 -Refer to Figure 7-22.If the Price Decreases from $80 to from $80