Concept explainers
These review exercises are for test preparation. They can also be used as a practice test. Answers are at the back of the book. The red bracketed section references tell you what part(s) of the chapter to restudy if your answer is incorrect.
Concept Reinforcement
Match each term in column A with the most appropriate graph in column B.
Column A | Column B |
Consumer Surplus
|
a. a) |
The graph from the provided options that matches the provided term “consumer surplus”.
Answer to Problem 1RE
Solution:
The graph that matches with the provided term “consumer surplus”is (d).
Explanation of Solution
Given information:
The provided term is “consumer surplus” choices of graphs are:
Consider the provided term, “Consumer surplus”
The consumer surplus is the profit obtained by consumer when he paid less than the amount, he wishes to pay for a product.
It is convenient to consider a demand and supply as a function of price. For this we will think of demand and supply as prices that are functions of quantity as:
The consumer demand curve is the graph of
Hence the graph ‘d’matches the provided term as its price decrease with the increase in quantity as shown below:
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