A Military Draft

The following questions refer to the accompanying graph, which shows the supply and demand for military service where Q0 represents the quantity provided by a volunteer army and Qd the quantity provided by a draft.

-Refer to Supply and Demand.The social gain from a draft is represented by
A) areas A + B + F.
B) areas A + B + F - E.
C) areas B + F.
D) Areas A + B + C + D.

Question

A Military Draft

The following questions refer to the accompanying graph, which shows the supply and demand for military service where Q0 represents the quantity provided by a volunteer army and Qd the quantity provided by a draft.

-Refer to Supply and Demand.The social gain from a draft is represented by
A) areas A + B + F. 
B) areas A + B + F - E. 
C) areas B + F. 
D) Areas A + B + C + D.

Quizplus · Accepted Answer

The social gain from a draft is represented by the area above the equilibrium price (P*) and below the demand curve, up to the quantity Q* that would be supplied in the absence of a draft. This area is represented by areas A + B + F. However, there is also a deadweight loss from the draft, represented by the triangle E, which represents the loss in consumer and producer surplus from the reduction in voluntary trade. Therefore, the net social gain is the area A + B + F minus the area E, which is represented by choice B.

A Military Draft The Following Questions Refer to the Accompanying Graph, Which Shows