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-(Figure: The Market for Hybrid Cars) Use Figure: The Market for Hybrid Cars.What area represents consumer surplus if there is a binding price floor at P₁?

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Use the following to answer question:

-(Figure: The Market for Hybrid Cars) Use Figure: The Market for Hybrid Cars.What area represents consumer surplus if there is a binding price floor at P₁?

Quizplus · Accepted Answer

A binding price floor set at P1 means the price is above the equilibrium price, reducing the quantity demanded. Consumer surplus is the area below the demand curve and above the price level, which is area 'a'.

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