1. The figure above shows the intersection of demand and supply at the price P2

Question

1. The figure above shows the intersection of demand and supply at the price P2 and quantity Q2 in a competitive market.

Refer to figure. What is the consumer surplus at the equilibrium level of output?

Select one:

a. a + b + f + g + h

b. a + b + c + d

c. a + b + c + f + g

d. a + b + c

2. The figure above shows the intersection of demand and supply at the price P2 and quantity Q2 in a competitive market.

Refer to the figure above. What is the producer surplus at the equilibrium level of output?

Select one:

a. f + g + j

b. f + g + h + i + j

c. f + g

d. i + h + g + f

Explanation / Answer

Q1
Answer
Consumer surplus is the area above P and below demand curve
=a+b+c
option d
Q2
answer
producer surplus is the area below P and above the supply curve
=area f+g+j
option a

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