a. The new consumer surplus is half of the original consumer surplus. b. The new

Question

a. The new consumer surplus is half of the original consumer surplus.

b. The new consumer surplus is 25 percent of the original consumer surplus.

c. The new consumer surplus is double the original consumer surplus.

d. The new consumer surplus is triple the original consumer surplus.

a. The new consumer surplus is half of the original consumer surplus.

b. The new consumer surplus is 25 percent of the original consumer surplus.

c. The new consumer surplus is double the original consumer surplus.

d. The new consumer surplus is triple the original consumer surplus.

Explanation / Answer

Consumer surplus is the area between demand curve and price.

When P = 100, consumer surplus = (1/2) x (200 - 100) x 50 = 2,500

When P = 150, consumer surplus = (1/2) x (200 - 150) x 25 = 625

New surplus is 25% that of the original surplus.

Correct option (b)

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