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Unformatted text preview: purchased are $3, $2, and $1, respectively. These surpluses are illustrated by the vertical bars drawn in Figure 1 . The sum total of these surpluses is the consumer surplus: The value $10, however, is only a crude approximation of the true consumer surplus in this example. The true consumer surplus is given by the area below the market demand curve and above the market price. This area consists of a triangle with base of length 5 and height of length 5. Applying the rule for the area of a triangle—one half the base multiplied by height—one finds that the value of the consumer surplus in this example is actually 12.5....
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This note was uploaded on 11/19/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.
- Fall '10
- Consumer Surplus