Assuming the Market Is in Equilibrium in the Graph Shown

question 90

Multiple Choice

Assuming the market is in equilibrium in the graph shown with demand D and supply S₁, total surplus is:

• A) greater than total surplus when market is in equilibrium at D and S₂.
• B) less than total surplus when market is in equilibrium at D and S₂.
• C) the same as total surplus when market is in equilibrium at D and S₂.
• D) zero.

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Definitions:

Present Value

The worth in present terms of a lump sum or cash flows anticipated in the future, using a predetermined rate of return for the calculation.

Per Year

A time frame reference indicating an annual basis.

Savings Account

A savings account in a bank or financial institution that guarantees the safety of the deposited capital while offering a low interest rate.

Interest Rate

The cost incurred by a borrower from a lender for utilizing assets, shown as a percentage of the principal sum.