Assume the market depicted in the graph is in equilibrium. Total surplus consists of area(s):
A) A.
B) A + B + C.
C) A + B + C + D + E.
D) D + E.

Question

Assume the market depicted in the graph is in equilibrium. Total surplus consists of area(s):
A) A. 
B) A + B + C. 
C) A + B + C + D + E. 
D) D + E.

Quizplus · Accepted Answer

Total surplus consists of consumer surplus (A+B+C) and producer surplus (D+E). It also includes the government's revenue from taxes (if any) which is represented by the rectangle D+G+E. Since the graph shows no taxes, the total surplus is only area A+B+C+D+E. Therefore, the correct answer is C.

Assume the Market Depicted in the Graph Is in Equilibrium