Exhibit 11.8

-Refer to Exhibit 11.8,which shows the demand and supply curves of a resource.The total earnings of the resource in equilibrium is represented by area _____
A)odeh.
B)bed.
C)dcf.
D)ocfg.
E)bed + odeh.

Question

Exhibit 11.8
 
-Refer to Exhibit 11.8,which shows the demand and supply curves of a resource.The total earnings of the resource in equilibrium is represented by area _____
A)odeh. 
B)bed. 
C)dcf. 
D)ocfg. 
E)bed + odeh.

Quizplus · Accepted Answer

The total earnings of a resource in equilibrium are represented by the price of the resource multiplied by the quantity of the resource sold. In the given exhibit, this would be represented by the area under the demand curve and above the supply curve up to the equilibrium point. Therefore, it includes both the area of the triangle bed (representing producer surplus) and the rectangle odeh (representing the total revenue at equilibrium price). Hence, the correct answer is the sum of these two areas, which is bed + odeh.

Exhibit 11.8 -Refer to Exhibit 11.8,which Shows the Demand and Supply Curves