According to the graph shown, if the market is in equilibrium, total surplus is:
A) $30.
B) $20.
C) $50.
D) $60.

Question

According to the graph shown, if the market is in equilibrium, total surplus is:
A) $30. 
B) $20. 
C) $50. 
D) $60.

Quizplus · Accepted Answer

Total surplus is represented by the sum of consumer surplus and producer surplus. At the equilibrium point, the quantity demanded is equal to the quantity supplied, which is 10. At this point, the price is $8. Both consumers and producers receive a surplus. Consumer surplus is represented by the triangle above the price line and below the demand curve, which is (1/2)*(8-2)*10 = $30. Producer surplus is represented by the triangle below the price line and above the supply curve, which is (1/2)*(8-2)*10 = $30. Therefore, the total surplus is $30+$20=$50. Hence the correct answer is C.

According to the Graph Shown, If the Market Is in Equilibrium