Question

Consider the market for plan tickets to the Caribbean. A bad winter is Eastern and central Canada increases the demand for tropical Caribbean vacations, shifting the demand curve to the right. The supply curve stays constant. Total surplus will:

Consider the market for plane tickets to the Caribbean. A bad winter in E stays constant. Total surplus will: O increase because consumer surplus increases. O decrease because both consumer and producer surplus decrease. O increase because both consumer and producer surplus increase. O increase because producer surplus increases Hint: Sketch a generic supply and demand curve and look at what happen References eBook & Resources Multiple Choice Learning Objective: 05-04 Cal surplus based on a graph or ta

Answer 1

Consumer surplus in defined as the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay It is shown by the area under the demand curve and above the price Produces surplus is defined as the difference between how much of a good the producer is willing to supply versus how much he actually receives It is shown by the area above the supply curve and show the market price Total surplus is the sum total of consumes surplus is the sum total of consumers surplus and produces surplus consider the market for plane tickets to the Caribbean the initial equilibrium was at point E_1, with price P_1 and Quantity The consumer surplus is the area between the triangle ABE_1 and the produces surplus is the area between the triangle BE_1C when the demand curve shifts to right the new equilibrium is at point E_2 with price P_2 and quantity Q_2 Here the consumer surplus