Measuring Consumer Surplus with the Demand curve Price of Album $100 John's willingness to pay Paul's willingness to pay 80 70 Georges willingness to pay Ringo's willingness to pay 50 Demand Quantity of Albums H arc Inc items and derived items copyright C 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Measuring Consumer Surplus with the Demand Curve... Price of Album 50 70 80 0 $100 1 2 3 4 Quantity of Albums John’s willingness to pay Paul’s willingness to pay George’s willingness to pay Ringo’s willingness to pay Demand
Measuring Consumer Surplus with the Demand curve Price of Album Price = $80 $100 Johns consumer surplus($20) 80 70 50 Demand Quantity of Albums H arc Inc items and derived items copyright C 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Measuring Consumer Surplus with the Demand Curve... Price of Album 50 70 80 0 $100 1 2 3 4 Quantity of Albums Demand John’s consumer surplus ($20) Price = $80
Measuring Consumer Surplus with the Demand curve Price of Album Price $70 $100 Johns consumer surplus( $30) 80 Pauls consumer surplus($10) 70r………r… 5ot Total consumer surplus($40) Demand Quantity of Albums H arc Inc items and derived items copyright o 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Measuring Consumer Surplus with the Demand Curve... Price of Album 50 70 80 0 $100 1 2 3 4 Quantity of Albums Demand John’s consumer surplus ($30) Total consumer surplus ($40) Price = $70 Paul’s consumer surplus ($10)
Measuring Consumer Surplus with the demand curve The area below the demand curve and above the price measures the consumer surplus in the market H arc Inc items and derived items copyright C 2001 by Harcourt, Inc
Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Measuring Consumer Surplus with the Demand Curve The area below the demand curve and above the price measures the consumer surplus in the market
Copyright C 2001 by Harcourt, Inc. All rights reserved How the Price affects consumer Surplus Price Initial consumer Consumer surplus surplus to new Consumers E Addition Consumer surplus to Demand initial ■■ Consumers 0 2 Quantity
Q2 P2 How the Price Affects Consumer Surplus... Quantity Price 0 Demand Copyright © 2001 by Harcourt, Inc. All rights reserved Initial consumer surplus Additional consumer surplus to initial consumers Consumer surplus to new consumers Q1 P1 D E F B C A