Exhibit 7-10 Refer to Exhibit 7-10.The consumer surplus before the subsidy is area

Name: Exhibit 7-10 Refer to Exhibit 7-10.The consumer surplus before the subsidy is area
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Question

Exhibit 7-10  Refer to Exhibit 7-10.The consumer surplus before the subsidy is area

Quizplus · Accepted Answer

Consumer surplus before subsidy is the area under the demand curve and above the price (a+b). The area c and d is producer surplus, while area e is deadweight loss. Therefore, the correct answer is option C, which represents the total consumer surplus before the subsidy.