Answer to Question #207868 in Economics for Paballo

Question

What area on the graph below represents consumer surplus?

 

•  A. area P₁0E
•  B. area P₁Q₁0
•  C. area P_M0E
•  D. area P₁EP_M

Answer 1

Consumer surplus is measured as the area below the downward-sloping demand curve, or the amount a consumer is willing to spend for given quantities of a good, and above the actual market price of the good, depicted with a horizontal line drawn between the y-axis and demand curve.

So, the correct answer is D. area P1EPM.