Exhibit 7-11 Refer to Exhibit 7-11.The consumer surplus before the price ceiling is area:

Question

Exhibit 7-11  Refer to Exhibit 7-11.The consumer surplus before the price ceiling is area:

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price paid. Before the price ceiling, consumer surplus is represented by the triangle bounded by the demand curve, the original price, and the quantity axis, which is area a + b + c. After the price ceiling is imposed, the new price is below the original equilibrium price, and the quantity demanded exceeds the quantity supplied. The quantity demanded is now represented by the point where the demand curve intersects the price ceiling, and consumer surplus is the triangle bounded by the demand curve, the price ceiling, and the quantity axis, which is area a + b + d + f. Therefore, the consumer surplus before the price ceiling is area a + b + c, which is option D.