Figure 7-8

-Refer to the figure above.At the market-clearing equilibrium,which area represents total consumer surplus

Question

Figure 7-8
 
-Refer to the figure above.At the market-clearing equilibrium,which area represents total consumer surplus

Quizplus · Accepted Answer

Total consumer surplus is represented by the area above the market price (P*) and below the demand curve (D) up to the quantity traded. This area is composed of both A and B+E, therefore the correct answer is C. Area C+F+G represents producer surplus, while the deadweight loss is the area between the supply and demand curves from the original equilibrium quantity to the new one.

Figure 7-8 -Refer to the Figure Above.At the Market-Clearing Equilibrium,which Area Represents