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 'CS, 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 Price

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 'CS, 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 Price

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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