Math Problem Statement

The rightward shift of the supply curve will cause consumer surplus to increase from area _____ to area _____.

The rightward shift of the supply curve will cause consumer surplus to increase from area _____ to area _____.

Solution

To analyze the change in consumer surplus due to the rightward shift of the supply curve, let's break down the components in the graph:

  1. Consumer Surplus Definition: Consumer surplus is the area between the demand curve and the price level, up to the equilibrium quantity.

  2. Initial and New Supply Curves:

    • The initial supply curve is S1S_1.
    • The supply curve shifts to the right to S2S_2, resulting in a lower equilibrium price and a higher equilibrium quantity.
  3. Equilibrium Points:

    • Before the shift, the equilibrium point is where S1S_1 intersects D1D_1, at point C (price approximately $30).
    • After the shift, the new equilibrium is where S2S_2 intersects D1D_1, at point D (price approximately $20).
  4. Consumer Surplus Areas:

    • Initial Consumer Surplus: Before the shift, consumer surplus is the area ABC.
    • New Consumer Surplus: After the shift, consumer surplus expands to the area ABCD.

Answer:

The rightward shift of the supply curve will cause consumer surplus to increase from area ABC to area ABCD.

Would you like a more detailed explanation or have further questions?


Related Questions:

  1. What happens to producer surplus when the supply curve shifts to the right?
  2. How would a leftward shift of the supply curve affect consumer surplus?
  3. What factors might cause a supply curve to shift to the right?
  4. How can changes in consumer and producer surplus illustrate economic efficiency?
  5. Why does consumer surplus increase when equilibrium price decreases?

Tip:

In economic graphs, consumer surplus is often represented as the area above the price level and below the demand curve, up to the point of equilibrium.

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Math Problem Analysis

Mathematical Concepts

Economics
Consumer Surplus
Supply and Demand

Formulas

Consumer Surplus = Area between Demand Curve and Price Level

Theorems

Consumer Surplus and Equilibrium Price Relationship

Suitable Grade Level

Grades 11-12