Multiple Choice
Refer to Figure 7-6. When the price is p2, producer surplus is:
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
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Refer to Figure 7-2. At the equilibrium price, consumer surplus is:
A
the area above the demand curve and below the equilibrium price
B
the area above the supply curve and below the equilibrium price
C
the area below the demand curve and above the equilibrium price
D
the area below the supply curve and above the equilibrium price
Verified step by step guidance1
Understand that consumer surplus is the difference between what consumers are willing to pay and what they actually pay at the market price.
Identify the demand curve on the graph, which shows the maximum price consumers are willing to pay for each quantity.
Locate the equilibrium price on the graph, where the demand and supply curves intersect.
Recognize that consumer surplus is the area between the demand curve and the equilibrium price line, up to the equilibrium quantity.
Express consumer surplus mathematically as the integral or area calculation of the demand curve minus the equilibrium price over the quantity range from zero to the equilibrium quantity.
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