The area between the market price and the demand curve provides a measure of:
A)consumer surplus.
B)producer surplus.
C)consumer surplus plus producer surplus.
D)marginal utility.

Question

The area between the market price and the demand curve provides a measure of:
A)​consumer surplus.
B)​producer surplus.
C)​consumer surplus plus producer surplus.
D)​marginal utility.

Quizplus · Accepted Answer

The area between the market price and the demand curve represents the difference between the amount that consumers are willing to pay for a good or service (as reflected by the demand curve) and the actual market price. This difference is known as consumer surplus, which represents the additional satisfaction or utility that consumers receive from being able to purchase the good at a lower price than they are willing to pay. Producer surplus, on the other hand, is the difference between the market price and the cost of production, and is represented by the area between the market price and the supply curve. Therefore, option A is the correct answer.

The Area Between the Market Price and the Demand Curve