If the daily demand curve for gasoline is as provided in the following graph, then how much consumer surplus would consumers receive if the market price for gasoline was $1.60 per litre? What about for a price of $1.20 per litre?

If the daily demand curve for gasoline is as provided in the following graph, then how much consumer surplus would consumers receive if the market price for gasoline was $1.60 per litre? What about for a price of $1.20 per litre?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

If the daily demand curve for gasoline is as provided in the following graph, then how
much consumer surplus would consumers receive if the market price for gasoline
was $1.60 per litre? What about for a price of $1.20 per litre?
Price
($ per litre)
$3.00
$1.60
$1.20
040
120
200
280
Demand
360 440
Quantity of gasoline
(millions of litres)

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Step 1: Define consumer surplus:

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Step 2: Calculate the consumer surplus at price $1.60 per litre.

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Step 3: Calculate the consumer surplus at price $1.20 per litre.

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