According to the graph shown,if the market is in equilibrium,total surplus is:
A) $30.
B) $20.
C) $50.
D) $60.

Question

According to the graph shown,if the market is in equilibrium,total surplus is:
A) $30. 
B) $20. 
C) $50. 
D) $60.

Quizplus · Accepted Answer

Total Surplus is the sum of consumer surplus and producer surplus. 
At equilibrium, consumer surplus is the area below the demand curve and above the price line, which is (8-5) x 5 = $15. 
Producer surplus is the area above the supply curve and below the price line, which is (5-2) x 5 = $15. 
Therefore, total surplus is $15 + $15 = $30. 
However, the graph shows that the price is actually $4, which means that there is a deadweight loss of $20. 
Thus, if the market was in equilibrium, the total surplus would have been $30 + $20 = $50.

According to the Graph Shown,if the Market Is in Equilibrium,total