In the following figure, the first panel shows a market situation prior to regulation and the second panel shows the effects of regulation.Figure 14.2
In the figure,
D: Demand curve for automobiles
S 1 : Supply curve of automobiles prior to regulation
S 2 : Supply curve of automobiles after regulation
FG: Clean up cost per unit
-Graphically, consumer surplus is the area:
A)above the demand curve.
B)below the supply curve.
C)under the demand curve and the supply curve.
D)above the market supply curve and under the equilibrium price.
E)under the market demand curve and above the equilibrium price.

Question

In the following figure, the first panel shows a market situation prior to regulation and the second panel shows the effects of regulation.Figure 14.2
  In the figure,
D: Demand curve for automobiles
S 1 : Supply curve of automobiles prior to regulation
S 2 : Supply curve of automobiles after regulation
FG: Clean up cost per unit
-Graphically, consumer surplus is the area:
A)above the demand curve. 
B)below the supply curve. 
C)under the demand curve and the supply curve. 
D)above the market supply curve and under the equilibrium price. 
E)under the market demand curve and above the equilibrium price.

Quizplus · Accepted Answer

Consumer surplus is represented graphically as the area under the market demand curve and above the equilibrium price. This area reflects the difference between what consumers are willing to pay and what they actually pay.

In the Following Figure, the First Panel Shows a Market