Figure 7-6

-Refer to Figure 7-6.Area A represents
A)producer surplus to new producers entering the market as the result of an increase in price from P₁ to P₂.
B)the increase in consumer surplus that results from an upward-sloping supply curve.
C)the increase in total surplus when sellers are willing and able to increase supply from Q₁ to Q₂.
D)the increase in producer surplus to those producers already in the market when the price increases from P₁ to P₂.

Question

Figure 7-6
 
-Refer to Figure 7-6.Area A represents
A)producer surplus to new producers entering the market as the result of an increase in price from P₁ to P₂. 
B)the increase in consumer surplus that results from an upward-sloping supply curve. 
C)the increase in total surplus when sellers are willing and able to increase supply from Q₁ to Q₂. 
D)the increase in producer surplus to those producers already in the market when the price increases from P₁ to P₂.

Quizplus · Accepted Answer

Area A represents the increase in producer surplus to those producers who were already in the market, as the price increases from P₁ to P₂. This is because the area represents the difference between the original equilibrium price (P₁) and the new equilibrium price (P₂) for the same quantity (Q₁) of goods produced, and only existing producers are able to supply goods at the original price. The increase in producer surplus for new producers entering the market is represented by a different area.

Figure 7-6 -Refer to Figure 7-6.Area a Represents