Question

The diagram shows the market for gardening services. At the market-clearing price and quantity of $30 per hour and 8000 hours of gardening services purchased, the economic surplus is Supply O A. the sum of the areas below the demand curve, up to 8000 hours - i.e. areas 1, 2, 3, 4, 5, 6, 7, 8. OB. the sum of the areas above the supply curve, but below the market-clearing price of $30 - 1.e., areas 3, 4, 7. OC. the sum of the areas below the demand curve - i.e., areas 1,2,3,4,5 6, 7, 8, 9. OD. the sum of the areas above the supply curve and below the demand curve - i.e., areas 1, 2, 3, 4, 6, 7. O E. the sum of the areas below the demand curve, but above the market-clearing price of $30 - i.e., areas 1, 2, 6. Price ($ per hour) 104 4 9 Demand 0- 2000 4000 6000 8000 10000 12000 14000 16000 Quantity (number of hours of gardening service per month)

Answer 1

Ans) the correct option is d) the sum of the areas above the supply curve and below the demand curve - i.e, areas 1,2,3,4,6,7

Where consumer surplus = 1, 2, 6 and producer surplus = 3, 7, 4. Economic surplus is the sum of both