Figure 7-4

-Refer to Figure 7-4.What does area B represent
A)the increase in producer surplus to new producers entering the market as the result of price rising from P₁ to P₂
B)the increase in consumer surplus that results from new consumers entering the market as the result of price rising from P₁ to P₂
C)an increase in producer surplus to every producer in the market as the result of price rising from P₁ to P₂
D)an increase in total surplus when sellers are willing and able to increase supply from Q₁ to Q₂

Question

Figure 7-4
 
-Refer to Figure 7-4.What does area B represent
A)the increase in producer surplus to new producers entering the market as the result of price rising from P₁ to P₂ 
B)the increase in consumer surplus that results from new consumers entering the market as the result of price rising from P₁ to P₂ 
C)an increase in producer surplus to every producer in the market as the result of price rising from P₁ to P₂ 
D)an increase in total surplus when sellers are willing and able to increase supply from Q₁ to Q₂

Quizplus · Accepted Answer

Area B represents the increase in producer surplus to new producers entering the market as the result of price rising from P₁ to P₂. This is because the area between the supply curve and the new price level (P₂) represents the increase in producer surplus, and this increase is due to new producers entering the market and being able to sell their products at a higher price.

Figure 7-4 -Refer to Figure 7-4.What Does Area B Represent