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Figure 7-1 A graph of price, P, versus quantity, Q, is a demand curve, D, represented by a straight line descending from (0, Maximum Price)
Figure 7-1 A graph of price, P, versus quantity, Q, is a demand curve, D, represented by a straight line descending from (0, Maximum Price) to (Maximum Quantity, 0). Two points are shown on the curve, from left to right, (Q 2, P 2), and (Q 1, P 1). Q 1 is greater than Q 2, and P 1 is less than P 2. The area under Curve D between Q = 0 and Q = Q 1 is divided into three rectangles and two triangles, as follows. From top to bottom, and left to right, they are as follow. Triangle A has the following vertices. (0, Maximum Price), (Q 2, P2,) (0, P 2). Rectangle B has the following vertices. (0, P 2), (Q 2, P 2), (Q 2, P 1), (0, P 1). Triangle C has the following vertices. (Q 2, P 2), (Q 1, P 1), (Q 2, P 1). Rectangle D has the following vertices. (0, P 1), (Q 2, P 1), (Q 2, 0), (0, 0). Rectangle F has the following vertices. (Q 2, P 1), (Q 1, P 1), (Q 1, 0), (Q 2, 0). Refer to Figure 7-1. When the price rises from P1 to P2, consumer surplus a. increases by an amount equal to A. b. increases by an amount equal to B+C. c. decreases by an amount equal to C. d. decreases by an amount equal to B+C
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