Consider the market to be in equilibrium with demand curve D and supply curve S.
-Refer to the diagram above.In the absence of a tax,total economic surplus in the market is
A) $64.
B) $40.
C) $32.
D) $16.
E) $8.

Question

Consider the market to be in equilibrium with demand curve D and supply curve S.
-Refer to the diagram above.In the absence of a tax,total economic surplus in the market is
A) $64. 
B) $40. 
C) $32. 
D) $16. 
E) $8.

Quizplus · Accepted Answer

The equilibrium quantity is 8 units and the equilibrium price is $8. At this point, consumer surplus is $32 (area above the price line and below the demand curve) and producer surplus is also $32 (area below the price line and above the supply curve). Therefore, total economic surplus in the market is $64.

Consider the Market to Be in Equilibrium with Demand Curve