Suppose that a consumer perceives X and AOG (all other goods) to be perfect (one-for-one) substitutes. The consumer has an income of $100 and the price of x is 80 cents. If the price of x rises to 1.20, what is the resulting change in consumer surplus? Show work and explain

Suppose that a consumer perceives X and AOG (all other goods) to be perfect (one-for-one) substitutes. The consumer has an income of $100 and the price of x is 80 cents. If the price of x rises to 1.20, what is the resulting change in consumer surplus? Show work and explain

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 8QFR

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Question

Suppose that a consumer perceives X and AOG (all other goods) to be perfect (one-for-one) substitutes.

The consumer has an income of $100 and the price of x is 80 cents. If the price of x rises to 1.20, what is the resulting change in consumer surplus?

Show work and explain

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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