Question

Consider the market for LCD TVsLCD TVs. Assume the market is perfectly competitive and at a​ market-clearing equilibrium. What area represents consumer​ surplus? ​
1. Use the triangle drawing tool to shade in consumer surplus. Label this area​ 'Consumer Surplus'. What area represents the producer​ surplus? ​
2. Use the triangle drawing tool to shade in producer surplus. Label this area​ 'Producer Surplus'. Carefully follow the instructions​ above, and only draw the required objects.

Answer 1

Answer:

Above colored area is the consumer surplus, below is the producer surplus.

Explanation:

Given the conditions in the question where there is a perfectly competitive market which means that the different products produces by different companies are essentially the same apart from their brands, the entry and exit barriers to the market are non-existent and there is transparency meaning that the price of the good are known to everyone.

If we draw the market clearing equilibrium graph of the situation, we can say that the colored area above the price of the TVs represent the consumer surplus and the colored area below the price of the TVs represent the producer surplus.

I hope this answer helps.