If the price increases from $200 to $400, what is the change in consumer surplus

To calculate the change in consumer surplus when the price increases from \$200 to \$400, follow these steps:

### 1. **Calculate the initial consumer surplus at \$200:**

As previously calculated:

- **Anthony's surplus**: $ \$500 - \$200 = \$300 $
- **Amanda's surplus**: $ \$400 - \$200 = \$200 $
- **Lily's surplus**: $ \$300 - \$200 = \$100 $
- **Francisco's surplus**: $ \$200 - \$200 = \$0 $
- **Max's surplus**: $ \$100 - \$200 = \$0 $ (Max does not buy the tablet.)

**Total consumer surplus at \$200** = $ \$300 + \$200 + \$100 + \$0 + \$0 = \$600 $

### 2. **Calculate the new consumer surplus at \$400:**

At the new price of \$400, only Anthony and Amanda will buy the tablet:

- **Anthony's surplus**: $ \$500 - \$400 = \$100 $
- **Amanda's surplus**: $ \$400 - \$400 = \$0 $
- **Lily's surplus**: $ \$300 - \$400 = -\$100 $ (Lily does not buy the tablet.)
- **Francisco's surplus**: $ \$200 - \$400 = -\$200 $ (Francisco does not buy the tablet.)
- **Max's surplus**: $ \$100 - \$400 = -\$300 $ (Max does not buy the tablet.)

**Total consumer surplus at \$400** = $ \$100 + \$0 + \$0 + \$0 + \$0 = \$100 $

### 3. **Calculate the change in consumer surplus:**

- **Initial consumer surplus**: \$600
- **New consumer surplus**: \$100
- **Change in consumer surplus**: $ \$100 - \$600 = -\$500 $

So, the consumer surplus decreases by **\$500** when the price increases from \$200 to \$400.

Would you like more details, or do you have any other questions? Here are five related questions:

1. How does the price elasticity of demand affect consumer surplus?
2. What happens to the consumer surplus if the price increases to \$450 instead?
3. Can consumer surplus ever be zero? Under what conditions?
4. What role does consumer surplus play in determining market equilibrium?
5. How does an increase in price affect overall welfare in a market?

**Tip:** When prices increase, consumer surplus generally decreases because fewer consumers are willing or able to purchase the product at the higher price.

Understand how consumer surplus changes when the price of a product increases from $200 to $400. Detailed step-by-step calculation shows the impact on individual consumer surpluses and overall consumer welfare. Suitable for advanced economics students and professionals.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation