Suppose a consumer is willing to buy a book for $50, but the actual price of the book in the market is $30. What is the consumer surplus in this case? If the price of the book increases to $40, what would be the new consumer surplus?

Suppose a consumer is willing to buy a book for $50, but the actual price of the book in the market is $30. What is the consumer surplus in this case? If the price of the book increases to $40, what would be the new consumer surplus?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter3: Supply And Demand: Theory

Section: Chapter Questions

Problem 16QP

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Question

Suppose a consumer is willing to buy a book for $50, but the actual price of the book in the market is $30.

What is the consumer surplus in this case?

If the price of the book increases to $40, what would be the new consumer surplus?

Consumer’s gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price and up to the equilibrium quantity. Consumer surplus is represented by area A.

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Step 1: Introduce the Concept of Consumer Surplus

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Step 2: Identify the Given Data

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Step 3: Calculate the Initial Consumer Surplus

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Step 4: Calculate the New Consumer Surplus after Price Increase

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