Figure 7-3
-Refer to Figure 7-3.Area C represents the
A)decrease in consumer surplus that results from a downward-sloping demand curve.
B)consumer surplus to new consumers who enter the market when the price falls from P2 to P1.
C)increase in producer surplus when quantity sold increases from Q2 to Q1.
D)decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.

Question

Figure 7-3 
-Refer to Figure 7-3.Area C represents the
A)decrease in consumer surplus that results from a downward-sloping demand curve. 
B)consumer surplus to new consumers who enter the market when the price falls from P2 to P1. 
C)increase in producer surplus when quantity sold increases from Q2 to Q1. 
D)decrease in consumer surplus to each consumer in the market when the price increases from P1 to P2.

Quizplus · Accepted Answer

Area C represents the additional consumer surplus gained by new consumers who enter the market when the price falls from P2 to P1. This is because the demand curve slopes downward, meaning that as the price decreases, more consumers are willing to buy the product at that lower price. The area above P1 and below the demand curve represents the extra consumer surplus gained by those new consumers.

Figure 7-3 -Refer to Figure 7-3.Area C Represents the