Figure 7-11. On the graph below, Q represents the quantity of the good and P represents the good's price.

-Refer to Figure 7-11.At the equilibrium,total surplus is measured by the area
A)ACG.
B)AFG.
C)DBG.
D)CFG.

Question

Figure 7-11. On the graph below, Q represents the quantity of the good and P represents the good's price.
 
-Refer to Figure 7-11.At the equilibrium,total surplus is measured by the area
A)ACG. 
B)AFG. 
C)DBG. 
D)CFG.

Quizplus · Accepted Answer

Total surplus is the sum of consumer surplus and producer surplus. Consumer surplus is the area below the demand curve and above the equilibrium price. Producer surplus is the area above the supply curve and below the equilibrium price. In Figure 7-11, the equilibrium price is P* and the equilibrium quantity is Q*. The consumer surplus is the area AFG and the producer surplus is the area DBG. Therefore, the total surplus is the area ACG.