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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

In the preceding diagram, what areas represent consumers’ surplus at the equilibrium price of PE? At PC? (Keep in mind that, at PC, the equilibrium quantity is neither produced nor sold.)

To determine

The consumer surplus.

Explanation

Figure 1 shows the demand curve and supply curve:

The horizontal axis of Figure 1 measures the quantity, and the vertical axis measures the price. The quantity supplied is given by the supply curve S1, and the demand is given by the demand curve D1. The market equilibrium is attained at the price level PE when the quantity demanded and supplied is equal to Q1 units...

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