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Unformatted text preview: Similarly, B earns $2 of consumer surplus (CS), and C earns $1 of CS. Customer D, the so-called "marginal" consumer, is willing to pay $6 for a unit, but since the market price is $6, D gets no consumer surplus. In practice, consumer surplus is pictured as in figure 4.a.2, as the area below the demand curve, above the price, and left of the quantity bought. 5/4/10 9:10 PM Blackboard Learn Page 2 of 2 https://blackboard.usc.edu/webapps/portal/frameset.jsp?tab_tab_grooard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_37604_1%26url%3D Figure 4.a.2 Figure 4.a.2 shows that when price is $7, consumer surplus is $30 (the yellow area). If the price falls to $4, existing consumers save $3 per unit on the 10 units they were already buying, for a gain of $30 (green) in consumer surplus. In addition, 4 more units are sold to buyers who wouldn't have wanted the good for $7, but who do want it for $4. These buyers gain $6 (blue) of consumer surplus when price falls from $7 to $4....
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This note was uploaded on 05/05/2010 for the course ECON 303 taught by Professor Cheng during the Spring '07 term at USC.
- Spring '07
- Consumer Surplus