NARRBEGIN: Exhibit 6-15
Exhibit 6-15

-On a normal day, Emily Mapai's demand curve for a cup of hot chocolate is initially shown as D in Exhibit 6-15. On a day when the high temperature does not get above zero degrees, her demand curve increases to D'. At a price P for a cup of hot chocolate, Emily's consumer surplus on a freezing day
A) cannot be determined without calculating an exact marginal valuation
B) increases a great deal over her consumer surplus on a normal day
C) will vary depending on whether hot chocolate is a normal or an inferior good
D) increases only if her demand curve is unit-elastic
E) decreases a great deal over her consumer surplus on a normal day

Question

NARRBEGIN: Exhibit 6-15
Exhibit 6-15
 
-On a normal day, Emily Mapai's demand curve for a cup of hot chocolate is initially shown as D in Exhibit 6-15. On a day when the high temperature does not get above zero degrees, her demand curve increases to D'. At a price P for a cup of hot chocolate, Emily's consumer surplus on a freezing day
A) cannot be determined without calculating an exact marginal valuation 
B) increases a great deal over her consumer surplus on a normal day 
C) will vary depending on whether hot chocolate is a normal or an inferior good 
D) increases only if her demand curve is unit-elastic 
E) decreases a great deal over her consumer surplus on a normal day

Quizplus · Accepted Answer

Emily's consumer surplus would increase a great deal on a freezing day because her demand curve shifts to D', indicating that she is willing to pay a higher price for a cup of hot chocolate than on a normal day. This means that at the same price P, Emily would receive a greater consumer surplus on a freezing day compared to a normal day.

NARRBEGIN: Exhibit 6-15 Exhibit 6-15