Figure: Supply and Demand 1 At a market quantity of 5, the shaded region in the figure represents:

Question

Figure: Supply and Demand 1  At a market quantity of 5, the shaded region in the figure represents:

Quizplus · Accepted Answer

The shaded region represents the area between the demand and supply curves that is not being exploited at the market quantity of 5. This is because there are potential buyers who are willing to pay a higher price than the equilibrium price, as well as potential sellers who are willing to accept a lower price. Therefore, there are unexploited gains from trade in this region.

Figure: Supply and Demand 1 at a Market Quantity