Asked by Kianna Hendricks on May 10, 2024
Verified
Refer to Figure 7-9. At equilibrium, total surplus is represented by the area
A) A+B+C.
B) A+B+D+F.
C) A+B+C+D+H+F.
D) A+B+C+D+H+F+G+I.
Total Surplus
The sum of consumer and producer surplus, representing the total benefit to society from a market transaction.
Equilibrium
The state in a market where supply equals demand, leading to a stable price for a given good or service.
- Acquire knowledge on the impact of market balance and imbalance on social welfare.
Verified Answer
KM
Kelsey MoranMay 15, 2024
Final Answer :
C
Explanation :
Total surplus in a market is the sum of consumer surplus and producer surplus. At equilibrium, consumer surplus is the area above the price level and below the demand curve (A+B+C), and producer surplus is the area below the price level and above the supply curve (D+H+F). Adding these areas together gives the total surplus (A+B+C+D+H+F).
Learning Objectives
- Acquire knowledge on the impact of market balance and imbalance on social welfare.