Final answer:
Consumer surplus is represented graphically as the area above the market price and below the demand curve, up to the quantity consumed. The correct answer is option B, the horizontal line at the market price, which can be seen in the example given with point J, where consumers paid less than they were willing to pay, resulting in a consumer surplus represented by area F.
Step-by-step explanation:
The question is asking to identify where the consumer surplus is measured on a graph in the context of consumption of goods, with hotdogs used as an example. Consumer surplus is a term from economics that represents the benefit consumers receive when they pay a price that is lower than what they were willing to pay. It is graphically depicted as the area between the demand curve and the market price, up to the quantity consumed. The correct answer to the student's multiple-choice question, therefore, is:
B. horizontal line at the market price.
As an example, point J illustrates that if the price were $90, consumers would have purchased 20 million units. However, with the equilibrium price at $80, consumers who would have paid $90 experience a gain equal to the difference, which constitutes their consumer surplus. This surplus is visually represented by area F on a graph, signifying the space above the market price but below the demand curve, indicating the additional value consumers got for what they actually paid.