Use the following to answer question:
-(Figure: Gain in Consumer Surplus) Look at the figure Gain in Consumer Surplus.Identify the area or areas that represent the gain in consumer surplus to consumers already participating in the market when the price falls from P₁ to P₂.

Question

Use the following to answer question:

-(Figure: Gain in Consumer Surplus) Look at the figure Gain in Consumer Surplus.Identify the area or areas that represent the gain in consumer surplus to consumers already participating in the market when the price falls from P₁ to P₂.

Quizplus · Accepted Answer

Consumer surplus increases for consumers already in the market when the price falls because they are now paying less for the same quantity of goods. The area representing the gain in consumer surplus for these consumers is directly above the new price level and below the demand curve, up to the initial quantity consumed before the price drop. This is represented by area B, as it is the area between the old and new prices for the original quantity of goods consumed.

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