Increase in Consumer Surplus from Price Reduction

Steps:

• Original consumer surplus is the area below demand curve and above original price up to 3 visits.
• New price is 50% lower, increasing quantity demanded beyond 3 visits.
• New consumer surplus is the area below demand curve and above new price up to increased quantity.
• Change in surplus is the trapezoid between original and new prices under demand curve to new quantity, labeled X-Y.

Why B is correct:

• X-Y measures the exact gain in consumer surplus as the area between prices under demand, per the definition of consumer surplus change for a price decrease.

Why the others are wrong:

• A: W likely represents only original surplus, unchanged by the policy.
• C: Y is probably a partial triangle, understating the full gain.
• D: Y-Z combines unrelated areas, overstating or misrepresenting the surplus increase.

Final answer: B