Figure 7-1

-Refer to Figure 7-1.What does area C represent
A)the decrease in consumer surplus to new consumers who enter the market when the price falls from P₂ to P₁
B)the increase in consumer surplus to new consumers who enter the market when the price falls from P₂ to P₁
C)an increase in producer surplus when quantity sold increases from Q₂ to Q₁
D)a decrease in consumer surplus to each consumer in the market when the price falls from P₂ to P₁

Question

Figure 7-1
 
-Refer to Figure 7-1.What does area C represent
A)the decrease in consumer surplus to new consumers who enter the market when the price falls from P₂ to P₁ 
B)the increase in consumer surplus to new consumers who enter the market when the price falls from P₂ to P₁ 
C)an increase in producer surplus when quantity sold increases from Q₂ to Q₁ 
D)a decrease in consumer surplus to each consumer in the market when the price falls from P₂ to P₁

Quizplus · Accepted Answer

Area C represents the increase in consumer surplus to new consumers who enter the market when the price falls from P₂ to P₁, as it captures the additional benefit to consumers who are now willing to purchase the product at the lower price.

Figure 7-1 -Refer to Figure 7-1.What Does Area C Represent