-Refer to Exhibit 4-8.If the wheat market is in competitive equilibrium the total surplus will equal
A) area 1 + 2 + 3 + 4 + 5
B) area 1 + 2 + 3
C) area 2 + 3 + 4 + 5
D) area 4 + 5

Question

-Refer to Exhibit 4-8.If the wheat market is in competitive equilibrium the total surplus will equal
A) area 1 + 2 + 3 + 4 + 5 
B) area 1 + 2 + 3 
C) area 2 + 3 + 4 + 5 
D) area 4 + 5

Quizplus · Accepted Answer

In a competitive equilibrium, total surplus is the sum of consumer surplus and producer surplus. This is represented by the entire area under the demand curve and above the supply curve, which is area 1 + 2 + 3 + 4 + 5.