Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, total surplus will be

A) $42.
B) $48.
C) $54.
D) $60.

Question

Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, total surplus will beA) $42.B) $48.C) $54.D) $60.

Boney Illickal · Accepted Answer

Final Answer : C, Explanation :  At a price of $4, the equilibrium quantity is 12 units (where quantity demanded equals quantity supplied). If only 6 units are bought and sold, consumer surplus is the area of the triangle with base 6 (from 0 to 6 units) and height 8 (from $12 to $4), which is 0.5 * 6 * 8 = $24. Producer surplus is the area of the triangle with base 6 and height 4 (from $0 to $4), which is 0.5 * 6 * 4 = $12. Total surplus is $24 + $12 = $36. However, the question asks for the total surplus if the equilibrium quantity of 12 units were bought and sold, which would be $54 (consumer surplus of $36 and producer surplus of $18).

Refer to Table 7-11. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, total surplus will be

A) $42.
B) $48.
C) $54.
D) $60.

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