Graph 7-4

-In Graph 7-4, at the market-clearing equilibrium, total surplus is represented by the area:
A) A + B + C
B) A + B + D + F
C) A + B + C + D + E +F
D) A + B + C + D + E + F + G + H

Question

Graph 7-4
 
-In Graph 7-4, at the market-clearing equilibrium, total surplus is represented by the area:
A) A + B + C 
B) A + B + D + F 
C) A + B + C + D + E +F 
D) A + B + C + D + E + F + G + H

Quizplus · Accepted Answer

At the market-clearing equilibrium, total surplus is the sum of consumer surplus (A + B + C) and producer surplus (D + E + F). Therefore, the correct choice is C since it includes both consumer and producer surplus. Option A only includes consumer surplus, while option B includes additional areas that do not contribute to total surplus. Option D includes areas that are not part of consumer or producer surplus, such as deadweight loss and tax revenue.

Graph 7-4 -In Graph 7-4, at the Market-Clearing Equilibrium, Total Surplus Is