Question

19197009 REZ Activities and Due Dates > Test 4 Hint 13500 Consider the accompanying supply and demand graph. What is the value of consumer surplus? What is the value of producer surplus? What is the value of total (also called social or economic) surplus?

Answer 1

consumer Surplug . Producer 4.5 Surplus - - - Dimend Quentily

Area of triangle (1/2) * Base * Height

Consumer surplus is the area of triangle ABC whose area is (1/2) * (9 - 4.5) * 5 = 11.25

Producer surplus is the area of triangle BCD whose area is (1/2) * (4.5 - 1) * 5 = 8.75

Total Surplus = Consumer surplus + Producer surplus = 11.25 + 8.75 = 20