Asked by Ashley Kenny on Apr 26, 2024
Verified
Refer to Figure 4.6. If price is P1, consumer surplus is area
A) A.
B) A + B + E.
C) G.
D) B + C + E + F + G.
Consumer Surplus
The difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay.
Equilibrium
A state in which market supply and demand balance each other, and as a result, prices remain stable.
Market
A place or system where buyers and sellers interact to trade goods, services, or contracts, allowing for the exchange of resources.
- Recognize the point of equilibrium in a market by evaluating the supply and demand curves, and calculate the surplus accruing to consumers and producers at this point of equilibrium.
- Comprehend the connection between market price, the personal readiness to purchase, and the surplus of the consumer.
Verified Answer
CU
Clara UnruhApr 27, 2024
Final Answer :
B
Explanation :
Consumer surplus is the area between the price line and the demand curve, up to the quantity demanded. At price P1, this includes areas A, B, and E.
Learning Objectives
- Recognize the point of equilibrium in a market by evaluating the supply and demand curves, and calculate the surplus accruing to consumers and producers at this point of equilibrium.
- Comprehend the connection between market price, the personal readiness to purchase, and the surplus of the consumer.