13 In the figure above what is the loss in consumer and prod

13. In the figure above, what is the loss in consumer and producer surplus if the government limits the quantity sold to 19 units?

A: $154 B: $6 C: $190 D: $9 E: $18

I know the answer is D, but why?

15 29 17 19 20 22 24 25 Quantity (units)

Consumer surplus (CS) is the area between demand curve & price, while producer surplus (PS) is the area between supply curve & price.

CS + PS = Net welfare gain (loss), which is measured as

Welfare gain/Loss = Change in price x Change in quantity

In a free market, equilibrium price = $7 & quantity = 22

With government regulation, quantity = 19 where price = $4

So, change in price = $(7 - 4) = $3

Change in quantity = 22 - 19 = 3

So, net welfare loss = CS + PS = 3 x $3 = $9