Not always downward sloping these complications are

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not always downward sloping. These complications are something we postpone for anotherday.5Consumer°s surplus and the demand curve
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is simply the area under the inverse demand curve between the points0andxon thex-axis:u(x) =Zx0u0(x)dx:The second term,px, is the area of the rectangle below the price line and between the points0andxon thex-axis. The di/erence between these two terms is the area of the trianglebetween the inverse demand curve and the price line. This is also the value of°u³°m, where°uis the utility achieved at the optimum.In other words, this is another way of °ndingconsumer°s surplus.We can also use this approach to measure the change in utility that results when priceschange. For example, suppose that the price of the good falls fromp= 1:2top0= 0:75. Howmuch would the utility change? This is equivalent to asking, ±How much does the consumer³ssurplus change?²If the consumer³s surplus is always the area between the inverse demandcurve and the price line, the change in consumer surplus will just be the di/erence betweenthese areas for the two prices. In other words, it will be the area bounded by the two pricelines and the inverse demand curve.0123450.00.51.01.52.02.5xpChange in CSPrice and consumer surplus

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Term
Spring
Professor
Gemici

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