Figure 7-4

-Refer to Figure 7-4.What does area A 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 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 price rises from P₁ to P₂

Question

Figure 7-4
 
-Refer to Figure 7-4.What does area A 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 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 price rises from P₁ to P₂

Quizplus · Accepted Answer

Area A represents the increase in producer surplus to those producers already in the market when price rises from P₁ to P₂. This is because the area is above the supply curve and below the price line, indicating the additional profit earned by existing producers as a result of the price increase.

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