The figure below shows the market equilibrium (point B)at the intersection of demand and supply curves under perfect competition. Figure 24.5 D: Market demand curve
S: Market supply curve
Refer to Figure 24.5.Which of the following regions on the graph represents consumer surplus in a perfectly competitive market?

Question

The figure below shows the market equilibrium (point B)at the intersection of demand and supply curves under perfect competition. Figure 24.5  D: Market demand curve
S: Market supply curve
Refer to Figure 24.5.Which of the following regions on the graph represents consumer surplus in a perfectly competitive market?

Quizplus · Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay for a product and what they actually pay in the market. In a perfectly competitive market, consumer surplus is represented by the area above the market price (P0) and below the demand curve (D) up to the point of equilibrium (B). This area is represented by the triangle P_{and the rectangle PC}BA, which together represent the total consumer surplus in the market. Hence, choice A is the correct answer as it includes both these areas. The other options either include only a portion of the total consumer surplus (choices B and D) or do not include any consumer surplus (choices C and E).

The Figure Below Shows the Market Equilibrium (Point B)at the Intersection