New Producer Surplus After Demand Decrease

Steps:

• Original equilibrium at M: supply intersects D1 at price P1 and quantity Q1.
• New demand D2 shifts left, creating new equilibrium at N: supply intersects D2 at lower price P2 and quantity Q2.
• Producer surplus is area below equilibrium price and above supply curve, from origin to Q2.
• Identify triangular area JHN as this region under P2 up to Q2 along supply.

Why C is correct:

• Producer surplus equals ∫(P2 - supply curve) from 0 to Q2, which is triangle JHN by definition.

Why the others are wrong:

• A: GMNH includes original surplus, overstates new surplus.
• B: JGM is partial area above supply but below original price, not new equilibrium.
• D: JNR extends beyond Q2, includes lost surplus from reduced quantity.

Final answer: C