February/March 2026 Paper 12

2026 · 30 questions · 30 parts · 30 marks

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8Consumer Producer SurplusHard1 mark

The diagram shows the demand for and supply of electric cars.

Diagram, the market for electric cars with price on the vertical axis and quantity on the horizontal axis. A downward-sloping demand curve D and an upward-sloping original supply curve S1 cross at a higher price P1. A second, upward-sloping supply curve S2 (after subsidy), lying below and to the right of S1, crosses D at a lower price P2 and a larger quantity. Dashed lines mark the price P1, the price P2, and the two quantities where each supply curve meets D. Six areas are labelled: T is the triangle above the P1 line, between the price axis and the S1/D crossing point; U, V and W lie in a horizontal band between the P1 and P2 lines, U to the left, then V and W further right, split by the quantity of the S1/D crossing; X and Y lie below the P2 line, Y to the left and X to the right of that same dividing quantity.

The government implements a subsidy for electric cars.

Which area represents the size of consumer surplus for those willing to buy an electric car when the price is

P_{2}