Figure 7-1 -Refer to Figure 7-1. Suppose that the price falls from P₂ to P_1. 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. C)additional consumer surplus to initial consumers. D)decrease in consumer surplus in the market when the price increases from P₁ to P₂.

Question

Quizplus · Accepted Answer

Area C represents the consumer surplus gained by new consumers who enter the market as a result of the price decrease. This is because when the price drops, consumers who were previously unwilling or unable to purchase the product at the higher price are now willing and able to buy it, thus gaining consumer surplus.

Figure 7-1 -Refer to Figure 7-1. Suppose That the Price Falls from the Price