In the provided graph, the equilibrium point in the market is where the Sand D curves intersect. At equilibrium, the total amount of spending that consumers would be paying for the product is represented by the area __________________________________________________________________
The Correct Answer and Explanation is :
The total amount of spending that consumers would pay for the product at equilibrium is represented by the area under the demand curve and up to the equilibrium quantity. This area is the total consumer expenditure or total revenue, as it reflects the price consumers are willing to pay multiplied by the quantity they are willing to buy.
At equilibrium, the market achieves a balance where the quantity demanded equals the quantity supplied. The equilibrium price is the price at which this balance occurs. The area under the demand curve up to this equilibrium point shows the total expenditure by consumers for the goods being purchased. This amount is important because it reflects the value consumers place on the good at that price, helping to determine market efficiency and consumer surplus.
Consumer surplus, which is the area between the price consumers are willing to pay and the actual market price, can also be derived from this graph. It represents the difference between what consumers are willing to pay for a good and what they actually do pay. It is a key measure of the benefit consumers receive from market transactions.
In summary, the total amount of spending consumers pay for the product at the market equilibrium is the area under the demand curve up to the equilibrium quantity. This area is often referred to as the total revenue in the market.