Answer to Question #47810 in Microeconomics for Yoyo

Question

The increase in consumer surplus from a price decrease is equal to the price difference multiplied by the new quantity. Explain in detail why this is true,false or uncertain.

Answer 1

It is false, because the increase in consumer surplus from a price decrease is shown as trapezoid, so it is equal to the price difference multiplied by the half of the old and new quantity sum (formula for trapezoid square) - S = (P1 - P2)*(Q1 + Q2)/2.