Figure 8-5

-Refer to Figure 8-5.Without a tax,total surplus in this market is
A)$3,000.
B)$4,800.
C)$6,000.
D)$7,200.

Question

Figure 8-5
 
-Refer to Figure 8-5.Without a tax,total surplus in this market is
A)$3,000. 
B)$4,800. 
C)$6,000. 
D)$7,200.

Quizplus · Accepted Answer

Without a tax, total surplus in the market is equal to the sum of consumer surplus and producer surplus. Consumer surplus is the area below the demand curve and above the market price, while producer surplus is the area below the market price and above the supply curve. The total surplus can be calculated by finding the area of the rectangle formed by the vertical distance between the demand and supply curves and the horizontal distance between the quantity traded. In this case, the total surplus is (12-8) x (600-300) = $6,000.

Figure 8-5 -Refer to Figure 8-5.Without a Tax,total Surplus in This Market