8. Consumer surplus using utility curves Suppose Rina has an allowance of $44 to spend on movies and other goods nach month (represented by hudget constraint CF). The following graph shows her initial utility (U₁) at point A from spending $27 of her total allowance on three movies ($9 each) and the remaining $17 on other goods. Note: Select a point on the graph to see its coordinates. 9 8 MONEY SPENT ON OTHER GOODS 8 9 18 MONEY SPENT ON MOVIES Now suppose Rina's parents decide not to allow her to see movies. As a result, she now spends all of her allowance on other goods, moving her to point At this point, her utility in it was at point A. Although her parents do not want her to see movies, they don't want to reduce the overall utility Rina gets from her allowance; therefore, they decide to increase her total monthly allowance by just enough to make her as happy as she was when she was allowed to see movies. This amount is represented by the distance between points and is equal to The consumer surplus Rina gets from movies at point A is equal to which of the following? O The entire area under U₁ The area between points A, D, and B O The distance between point C and point D O The area between U, and her budget constraint
8. Consumer surplus using utility curves Suppose Rina has an allowance of $44 to spend on movies and other goods nach month (represented by hudget constraint CF). The following graph shows her initial utility (U₁) at point A from spending $27 of her total allowance on three movies ($9 each) and the remaining $17 on other goods. Note: Select a point on the graph to see its coordinates. 9 8 MONEY SPENT ON OTHER GOODS 8 9 18 MONEY SPENT ON MOVIES Now suppose Rina's parents decide not to allow her to see movies. As a result, she now spends all of her allowance on other goods, moving her to point At this point, her utility in it was at point A. Although her parents do not want her to see movies, they don't want to reduce the overall utility Rina gets from her allowance; therefore, they decide to increase her total monthly allowance by just enough to make her as happy as she was when she was allowed to see movies. This amount is represented by the distance between points and is equal to The consumer surplus Rina gets from movies at point A is equal to which of the following? O The entire area under U₁ The area between points A, D, and B O The distance between point C and point D O The area between U, and her budget constraint
Chapter1: Making Economics Decisions
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Transcribed Image Text:8. Consumer surplus using utility curves
Suppose Rina has an allowance of $44 to spend on movies and other goods each month (represented by hudget constraint CF). The following graph
shows her initial utility (₁) at point A from spending $27 of her total allowance on three movies ($9 each) and the remaining $17 on other goods.
Note: Select a point on the graph to see its coordinates.
MONEY SPENT ON OTHER GOODS
60
R
00
40
30
10
0
0
D
Р
9
G
18
MONEY SPENT ON MOVIES
45
81
Now suppose Rina's parents decide not to allow her to see movies. As a result, she now spends all of her allowance on other goods, moving her to
point At this paint, her utility is,
it was at point A.
Although her parents do not want her to see movies, they don't want to reduce the overall utility Rina gets from her allowance; therefore, they decide
to increase her total monthly allowance by just enough to make her as happy as she was when she was allowed to see movies. This amount is
represented by the distance between points
and is equal to S
The entire area under U
The area between points A, D, and B
The distance between point C and point D
O The area between U, and her budget constraint
The consumer surplus Rina gets from movies at point A is equal to which of the following?
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