The following figure shows the demand and supply of television sets in a city. Since TVs are considered normal goods, demand increases from D1 to D2 in response to an increase in the income level.

a. Use the figure to complete the table below:

b. Use your answers to part (a) of this problem to answer the following questions:
i. Did consumer surplus definitely rise, definitely remain constant, definitely fall, or is the direction of the change in consumer surplus unclear?
ii. Did producer surplus definitely rise, definitely remain constant, definitely fall, or is the direction of the change in producer surplus unclear?
iii. Did social surplus definitely rise, definitely remain constant, definitely fall, or is the direction of the change in social surplus unclear?

Transcribed Image Text:

P2- D2 D4 Quantity Before I ncome After Income Rose Change Rose Consumer Surplus Producer Surplus Social Surplus