Refer to the above diagram.Assuming equilibrium price P₁,consumer surplus is represented by areas: A) a + b. B) a + b + c + d. C) c + d. D) a + c.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum price consumers are willing to pay and the actual price they pay. In this case, consumer surplus is represented by the area above price PS1 and below the demand curve (a) plus the area below price PS1 and above the new price (b). Therefore, the correct answer is A, a + b.

Refer to the Above Diagram