The graph shows the dermand curve for DVDs and the market pr

The graph shows the dermand curve for DVD_s and the market price of DVD With the given demand for DVDs, if the price of a DVD falls from $20 to $10. how docs consumer surplus change? Consumer surplus by

Solution

Answer:

Given the graph shows the demand curve for DVDs (Quantity) and the market price of a DVDs.

The Price of a DVDs falls from $20 to $10 in a market.

How does consumer surplus change?

Simple formula for Calculating the Consumer Surplus:

(Triangle Base x Triangle Height)/2

For Example:

The following graph shows the price in X-axis and quantity in Y-axis.

www.reduceimages.com/download.php?image=cd1a756b5a

In this case How to calculate the Consumer Surplus?

((40-0) x (3,600-2,000))/2

(64,000)/2 = $32,000

Therefore the Consumer Surplus is: $32,000

In the same case in our problem, the market price of a DVDs falls from $20 to $10, but the Quantity is stable. The Triangle Base is: 30 and Triangle Height is: 15 (25 minus 10).

                            = ( (30 x 15)/2)

                            = 450/2

                            = 225

Therefore the Consumer Surplus is: $225.

(Triangle Base x Triangle Height)/2