The Diagram Below Shows the Demand and Supply Curves in a Perfectly

question 1

Multiple Choice

The diagram below shows the demand and supply curves in a perfectly competitive market. FIGURE 12- 5
-Refer to Figure 12- 5. In the free- market equilibrium, producer plus consumer surplus is maximized and is illustrated by the area

• A) 1 + 2 + 3 + 4.
• B) P1P3E.
• C) 1 + 2.
• D) P1P2E.
• E) P3P2E.

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Definitions:

Total Utility

The overall satisfaction or benefit that a consumer derives from consuming a certain quantity of goods or services.

Preferences

The subjective tastes and desires of consumers that influence their choices among various goods and services.

Apples

In economic and financial contexts, this term is often used metaphorically to represent the comparison of similar items or investments, as in "comparing apples to apples."

Oranges

A citrus fruit characterized by a round shape and a sweet, juicy pulp, commonly consumed fresh or used in beverages.