Asked by Greyson Grubb on May 02, 2024
Verified
(Figure: Consumer Surplus I) Look at the figure Consumer Surplus I.If the price falls from P2 to P1,consumer surplus increases by the area:
A) ABP2.
B) AFP1.
C) BGF.
D) P1P2BF.
Consumer Surplus
The gap between what consumers are ready to pay in total and what they end up actually paying.
- Gain insight into the idea of consumer surplus and the way it is illustrated graphically.
- Evaluate the modifications in consumer surplus caused by price movement.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
D
Explanation :
Consumer surplus increases by the area between the initial price level (P2) and the new lower price level (P1), above the demand curve and up to the point where the quantity demanded increases due to the price drop. This area is represented by D, which is the area between the two price levels, above the demand curve, and up to the new quantity demanded, encapsulated by the points P1, P2, and BF.
Learning Objectives
- Gain insight into the idea of consumer surplus and the way it is illustrated graphically.
- Evaluate the modifications in consumer surplus caused by price movement.
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