Consumer Surplus in Surplus Market

Steps:

• Identify quantity sold as Q1, the demand at price P1, with surplus indicating unsold supply.
• Consumer surplus measures value consumers place above payment, the area under demand curve above P1 up to Q1.
• In the diagram, this triangular area spans from price axis point P to quantity Q2 along demand, down to P1.
• Calculate area as (1/2) base Q1 times height, but labeled as PxQ2 matching the surplus region.

Why C is correct:

• Consumer surplus is defined as the integral under demand curve minus total expenditure (P1 × Q1), corresponding to area PxQ2 in the diagram.

Why the others are wrong:

• A: PxQ1 represents total revenue, not surplus.
• B: PxQ0 reflects equilibrium revenue, irrelevant to P1 scenario.
• D: xQ0 is a partial area, missing full consumer valuation height.

Final answer: C