Exhibit 6-13 When the price is P in Exhibit 6-13, the shaded area represents
A)a shortage
B)producer surplus
C)a price floor
D)consumer surplus
E)a price ceiling

Question

Exhibit 6-13  When the price is P in Exhibit 6-13, the shaded area represents
A)a shortage 
B)producer surplus 
C)a price floor 
D)consumer surplus 
E)a price ceiling

Quizplus · Accepted Answer

The shaded area represents consumer surplus, which is the difference between the maximum price consumers are willing to pay for a good and the price they actually pay. This is because the quantity demanded exceeds the quantity supplied at the given price, indicating that consumers are willing to pay more for the good than what it is currently being sold for. A shortage would be represented by the opposite scenario, where the quantity demanded exceeds the quantity supplied at a given price and there is no shaded area. Producer surplus would be represented by the area above the supply curve and below the price, which is not shaded in this graph. A price floor and price ceiling would be represented by horizontal lines above or below the equilibrium price, respectively, which is not present in this graph.

Exhibit 6-13 When the Price Is P in Exhibit