Figure 7-1 -Refer to Figure 7-1. When the price falls from P₂ to P₁, consumer surplus A)increases by an amount equal to B. B)increases by an amount equal to B+C. C)decreases by an amount equal to B+C. D)decreases by an amount equal to C.

Question

Quizplus · Accepted Answer

When the price falls, consumer surplus increases because consumers are getting more utility for a lower price. The increase in consumer surplus is represented by the areas under the demand curve but above the new lower price, which includes both areas B and C.

Figure 7-1 -Refer to Figure 7-1. When the Price Falls from P2

Figure 7-1 -Refer to Figure 7-1. When the Price Falls from P₂