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b. Due to the increase in price, consumer surplus O rises by less than $50. O rises by more than $50. falls by less than $50. O falls by more than $50.

b. Due to the increase in price, consumer surplus O rises by less than $50. O rises by more than $50. falls by less than $50. O falls by more than $50.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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b. Due to the increase in price, consumer surplus O rises by less than $50. O rises by more than $50. O falls by less than $50. O falls by more than $50.
Transcribed Image Text:b. Due to the increase in price, consumer surplus O rises by less than $50. O rises by more than $50. O falls by less than $50. O falls by more than $50.
Use the diagram below to answer the following questions. Assume an initial market price of $4. a. Identify the initial area of consumer surplus (CS1) when the market price is $4. Next, assume that supply decreases and the market price rises to $5. Draw the new supply curve and then identify the new area of consumer surplus (CS2). Instructions: (1) Use the tool provided 'CS1' to identify the initial area of consumer surplus. This will drop a small triangle with three endpoints onto the graph. Drag the endpoints to the appropriate position to identify the initial area of consumer surplus. (2) Then use the tool provided 'S2' to draw the new supply curve. (3) Use the tool provided 'CS2' and follow the same process as before to identify the second area of consumer surplus. $10 Tools $9 $8 CS, CS2 $7 $6 S2 $5 $4 $3 $2 $1 D, 10 20 30 40 50 60 70 80 90 100 Quantity Price
Transcribed Image Text:Use the diagram below to answer the following questions. Assume an initial market price of $4. a. Identify the initial area of consumer surplus (CS1) when the market price is $4. Next, assume that supply decreases and the market price rises to $5. Draw the new supply curve and then identify the new area of consumer surplus (CS2). Instructions: (1) Use the tool provided 'CS1' to identify the initial area of consumer surplus. This will drop a small triangle with three endpoints onto the graph. Drag the endpoints to the appropriate position to identify the initial area of consumer surplus. (2) Then use the tool provided 'S2' to draw the new supply curve. (3) Use the tool provided 'CS2' and follow the same process as before to identify the second area of consumer surplus. $10 Tools $9 $8 CS, CS2 $7 $6 S2 $5 $4 $3 $2 $1 D, 10 20 30 40 50 60 70 80 90 100 Quantity Price
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