Figure 7-1
-Refer to Figure 7-1.If the price of the good is $150,then consumer surplus amounts to
A)$150.
B)$200.
C)$250.
D)$300.

Question

Figure 7-1 
-Refer to Figure 7-1.If the price of the good is $150,then consumer surplus amounts to
A)$150. 
B)$200. 
C)$250. 
D)$300.

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good and the actual price they have to pay. In this case, the demand curve represents the maximum price consumers are willing to pay and the supply curve represents the actual market price. The point where the demand curve intersects with the price of $150 determines the quantity demanded (Q1). Consumer surplus is then calculated as the area between the demand curve and the price line from 0 to Q1. Therefore, consumer surplus in this case is (1/2) x ($400 - $150) x Q1, which is equal to (1/2) x ($250) x 2 = $250.

Figure 7-1 -Refer to Figure 7-1.If the Price of the Good Is