-The figure above shows the market for umbrellas in Sunville. When the market for umbrellas in Sunville is in equilibrium, what is the total surplus?

Question

Quizplus · Accepted Answer

The total surplus is the sum of the consumer surplus and the producer surplus. The consumer surplus is the difference between the price consumers are willing to pay for a good and the price they actually pay. The producer surplus is the difference between the price producers receive for a good and the price they are willing to accept. In this case, the equilibrium price is $12, and the equilibrium quantity is 1,000 umbrellas. The consumer surplus is the area below the demand curve and above the equilibrium price, which is $6,000. The producer surplus is the area above the supply curve and below the equilibrium price, which is also $6,000. Therefore, the total surplus is $12,000.

-The Figure Above Shows the Market for Umbrellas in Sunville