Exhibit 3A-1 Comparison of Market Efficiency and Deadweight Loss

As shown in Exhibit 3A-1, if the market is in equilibrium, then producer surplus is represented by:
A) ADFB.
B) CEFD.
C) EGH.
D) BEF.

Question

Exhibit 3A-1 Comparison of Market Efficiency and Deadweight Loss

As shown in Exhibit 3A-1, if the market is in equilibrium, then producer surplus is represented by:
A) ADFB. 
B) CEFD. 
C) EGH. 
D) BEF.

Quizplus · Accepted Answer

If the market is in equilibrium, producer surplus is represented by the area above the supply curve and below the equilibrium price, which is CEFD in this case. ADFB represents consumer surplus, and EGH represents deadweight loss. Choice A (ADFB) and C (EGH) are incorrect as they do not represent producer surplus. Choice D (BEF) represents a combination of consumer and producer surplus, but it does not represent the full extent of producer surplus in equilibrium.