Figure 4-3 Figure 4-3 shows the market for granola.The market is initially in equilibrium at a price of P1 and a quantity of Q1.Now suppose producers decide to cut output to Q2 in order to raise the price to P2.
-Refer to Figure 4-3.What area represents consumer surplus at the equilibrium price of P1?

Question

Figure 4-3  Figure 4-3 shows the market for granola.The market is initially in equilibrium at a price of P1 and a quantity of Q1.Now suppose producers decide to cut output to Q2 in order to raise the price to P2.
-Refer to Figure 4-3.What area represents consumer surplus at the equilibrium price of P1?

Quizplus · Accepted Answer

Consumer surplus at the equilibrium price of P1 is represented by area A + B + C. When the price rises to P2, consumer surplus decreases by area A and B, while producer surplus increases by area A. Thus, the total change in surplus is area C + D + E, which is transferred from consumers to producers.

Figure 4-3 Figure 4-3 Shows the Market for Granola