Resource Supply/Demand

The following questions refer to the accompanying graph, which shows the supply and demand for a resource. The owner of the resource is receiving the price P0 and is providing the quantity Q0.

-Refer to Resource Supply/Demand.The rent earned by the owner of the resource is measured by
A) area A + B + C.
B) area B + C + D.
C) area B + C.
D) area C + D.

Question

Resource Supply/Demand

The following questions refer to the accompanying graph, which shows the supply and demand for a resource. The owner of the resource is receiving the price P0 and is providing the quantity Q0.

-Refer to Resource Supply/Demand.The rent earned by the owner of the resource is measured by
A) area A + B + C. 
B) area B + C + D. 
C) area B + C. 
D) area C + D.

Quizplus · Accepted Answer

The rent earned by the owner of the resource is measured by the area B + C, which represents the amount of surplus created by the difference between the equilibrium price and the minimum price the owner is willing to accept for supplying the resource. Areas A and D represent consumer surplus and producer surplus, respectively, but they do not directly contribute to the rent earned by the resource owner. Therefore, the best choice is C.

Resource Supply/Demand The Following Questions Refer to the Accompanying Graph, Which Shows