Figure 7-1

-Refer to Figure 7-1.At the price of P₁,what is consumer surplus
A)A
B)A + B
C)A + B + C
D)A + B + D

Question

Figure 7-1
 
-Refer to Figure 7-1.At the price of P₁,what is consumer surplus
A)A 
B)A + B 
C)A + B + C 
D)A + B + D

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay (represented by the demand curve) and the actual price they pay for a good. In Figure 7-1, consumer surplus is represented by the area A+B+C. Therefore, the correct answer is C. A is the area of the triangle to the left of the demand curve (which represents the amount that consumers who are willing to pay more than P₁ would have been willing to pay), B is the area above the supply curve and to the left of the point where it intersects the demand curve (which represents the amount that consumers who are willing to pay less than P₁, but who are satisfied at P₁, save), and C is the area below the demand curve and above P₁ (which represents the additional satisfaction that consumers who are willing to pay more than P₁ receive but don't have to pay for).

Figure 7-1 -Refer to Figure 7-1.At the Price of P₁,what Is Consumer