The figure below shows the supply and demand curves for oranges in Smallville. When this market is in equilibrium, total economic surplus is ________ per day.
A)$0
B)$80
C)$160
D)$320

Question

The figure below shows the supply and demand curves for oranges in Smallville.  When this market is in equilibrium, total economic surplus is ________ per day.
A)$0 
B)$80 
C)$160 
D)$320

Quizplus · Accepted Answer

Total economic surplus is the sum of both consumer and producer surplus. In equilibrium this is the area beneath the demand curve and above the supply curve, to the left of the equilibrium quantity. Since the area of any triangle equals ½ × base × height, total economic surplus in this market is equal to ½ × $16 × 20 = $160.

The Figure Below Shows the Supply and Demand Curves for Oranges