Figure 3-18
-Refer to Figure 3-18. When the price falls from P₁ to P₂, which area represents the increase in consumer surplus to existing buyers?

Question

Figure 3-18 -Refer to Figure 3-18. When the price falls from P₁ to P₂, which area represents the increase in consumer surplus to existing buyers?

Quizplus · Accepted Answer

When the price falls from P₁ to P₂, the increase in consumer surplus to existing buyers is represented by the area BCED. This is because the existing buyers are now able to purchase the same quantity of the good at a lower price, resulting in a gain in consumer surplus.

Figure 3-18 -Refer to Figure 3-18. When the Price Falls from P1

Figure 3-18 -Refer to Figure 3-18. When the Price Falls from P₁