Use the following diagram to answer the following questions.

-Refer to Cocaine. Suppose the price of cocaine increases from P₁ to P₂. The change in a casual user's expenditures will be equal to area:

Question

Use the following diagram to answer the following questions.
 
-Refer to Cocaine. Suppose the price of cocaine increases from P₁ to P₂. The change in a casual user's expenditures will be equal to area:

Quizplus · Accepted Answer

When the price of cocaine increases from P₁ to P₂, the quantity demanded decreases from Q₁ to Q₂. The change in expenditures for a casual user is equal to the difference between the original expenditure and the new expenditure. Therefore, the change in expenditures is equal to the area A - E - F, as shown in the diagram. Therefore, the correct choice is C.

Use the Following Diagram to Answer the Following Questions