Figure SEQ Figure 1
-Consider Figure 1.Economic surplus at the equilibrium price is
A)$20
B)$40
C)$80
D)$120

Question

Figure SEQ Figure  1 
-Consider Figure 1.Economic surplus at the equilibrium price is
A)$20 
B)$40 
C)$80 
D)$120

Quizplus · Accepted Answer

Economic surplus at the equilibrium price is the area between the demand and supply curves up to the equilibrium quantity. In Figure 1, the equilibrium quantity is 8 and the equilibrium price is $10. The economic surplus is the shaded area, which can be calculated as: 
($20 - $10) x 8 / 2 + ($20 - $10) x (12 - 8) = $80. Therefore, the best choice is C, $80.