Exhibit 3 Refer to Exhibit 3. If free trade is allowed, consumer surplus is the
A) Area A + B + C + D + E + F + G
B) Area A + B
C) Area A + B + C + D + E + F
D) Area A
E) Area A + B + C

Question

Exhibit 3  ​ Refer to Exhibit 3. If free trade is allowed, consumer surplus is the
A) Area A + B + C + D + E + F + G 
B) Area A + B 
C) Area A + B + C + D + E + F 
D) Area A 
E) Area A + B + C

Quizplus · Accepted Answer

Consumer surplus is the area above the market price and below the demand curve. If free trade is allowed, the price will decrease from P1 to P2, and the consumer surplus will increase to include areas C, D, E, and F. Therefore, the correct choice is C, which includes all these areas in addition to areas A and B from the original equilibrium.

Exhibit 3 ​ Refer to Exhibit 3

Exhibit 3 Refer to Exhibit 3