(Figure: Market Demand for Oranges) Consider the figure Market Demand for Oranges. The amount by which the total benefits of oranges to consumers exceed consumers' total expenditures on oranges is called _____. If the price of oranges is B, this quantity is depicted by the area _____.

A)producer surplus; BCD
B)consumer surplus; 0CDE
C)consumer surplus; BCD
D)net benefit; 0BDE

Question

(Figure: Market Demand for Oranges) Consider the figure Market Demand for Oranges. The amount by which the total benefits of oranges to consumers exceed consumers' total expenditures on oranges is called _____. If the price of oranges is B, this quantity is depicted by the area _____.

A)producer surplus; BCD 
B)consumer surplus; 0CDE 
C)consumer surplus; BCD 
D)net benefit; 0BDE

Quizplus · Accepted Answer

The amount by which the total benefits of oranges to consumers exceed consumers' total expenditures on oranges is called consumer surplus. This is depicted by the area BCD in the figure, which represents the extra benefit that consumers receive from purchasing oranges at a lower price than they are willing to pay. Producer surplus, depicted by the area below the supply curve and above the equilibrium price, represents the extra benefit received by producers from selling oranges at a price higher than their marginal cost. Net benefit is not a commonly used term in economics, and is not a correct answer choice in this context.

(Figure: Market Demand for Oranges) Consider the Figure Market Demand