The figure shows the competitive market for milk.
-In the figure above, when the market is in equilibrium, what is the total surplus?
A) $1,000
B) $800
C) $200
D) $1,600

Question

The figure shows the competitive market for milk.
-In the figure above, when the market is in equilibrium, what is the total surplus?
A) $1,000 
B) $800 
C) $200 
D) $1,600

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 are willing to accept for a good and the price they actually receive. In this case, the consumer surplus is $500 and the producer surplus is $500, so the total surplus is $1,000.

The Figure Shows the Competitive Market for Milk