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

Cross elasticity of demand — practice question

The diagram illustrates how the number of passengers changes when a company lowers the fare for a train trip from OP1 to OP2. Which areas represent the consumer surplus at the new fare for the original passengers and for the extra passengers?

  • Aoriginal passengers: v; additional passengers: y
  • Boriginal passengers: v + w; additional passengers: y
  • Coriginal passengers: v + w + x; additional passengers: y + z
  • Doriginal passengers: x; additional passengers: z

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