After the price floor is instituted, the legal minimum price that can be charged by suppliers is $70 per barrel. The maximum price that a few of the consumers are still willing to pay is $100 per barrel of gosum berries. With the price floor at $70 per barrel, consumers buy 300 barrels of gosum berries per month. How much consumer surplus is created with the price floor?
½ (300 x 30) = $4,500
Answer: Consumer surplus is area under demand curve and market price line.
Area of triangle DAB formed by demand curve and price line of $70.
Area= .5*base*height
=.5*300*(100-70)
=.5*300*30
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