Comsumer Surpluz

Question 1

Decrease in price

Answer 1

A = og consumer surplus

B = gain in consumer surplus

A + b = new consumer surplus

Question 2

Increase in price

Answer 2

A= new consumer surplus

B = loss in consumer surplus

A+ b = original consumer surplus

Question 3

Definition of consumer surplus

Answer 3

The welfare gained by a consumer who pays less for a good or a service than the maximum that they would have been prepared to pay

Question 4

Calculate cs when business sells popcorn at 1 pound but Tom values it at 2

Answer 4

1 pound consumer surplus