Question

Suppose the price is $6 per sheet of plywood. Suppose the price falls to $4 per sheet of plywood.How much of the increase in consumer surplus was additional consumer surplus for the people who would have bought plywood at $6 anyway.

Answer 1

Answer:

"$2,500" is the appropriate answer.

Explanation:

The question given seems to be incomplete. Below there is a attachment of full question is provided.

The given values are:

Plywood's price,

= $6 per sheet

Price falls,

= $4

Now,

At price $6, the consumer surplus will be:

= $0.5\times 1000\times (10-6)$

= $0.5\times 1000\times 4$

= $2,000$ ($)

When price falls, the consumer surplus will be:

= $0.5\times 1500\times (10-4)$

= $0.5\times 1500\times 6$

= $4,500$ ($)

Hence,

The increase in consumer surplus will be:

= $4500-2000$

= $2,500$ ($)