Economics 9708 · AS & A Level · Cross elasticity of demand

Cross elasticity of demand — practice question

Initially, the television service can be viewed free of charge. The television company then starts to charge viewers $6 per hour to watch its programmes. The demand curve is D. What is the value of the fall in consumer surplus, and what value of consumer surplus is left after the hourly charge is introduced?

  • Alost consumer surplus $9 000; remaining consumer surplus $4 000
  • Blost consumer surplus $9 000; remaining consumer surplus $16 000
  • Clost consumer surplus $21 000; remaining consumer surplus $4 000
  • Dlost consumer surplus $21 000; remaining consumer surplus $16 000

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