Under autarky, domestic producer surplus is represented by the area
A)above the supply curve and below the equilibrium price.
B)above the supply curve and below the demand curve.
C)below the demand curve and above the equilibrium price.
D)above the demand curve and below the supply curve.

Question

Quizplus · Accepted Answer

Under autarky, the domestic producer surplus is the area above the supply curve and below the equilibrium price. This is because, in an autarky situation, there is no competition from foreign producers, and hence the equilibrium price is determined solely by the intersection of the domestic supply and demand curves. The producer surplus, therefore, is the difference between the equilibrium price and the minimum price at which producers are willing to supply their goods, which is represented by the area above the supply curve and below the equilibrium price.

Under Autarky, Domestic Producer Surplus Is Represented by the Area