The above figure shows the domestic market for tomatoes Supp

The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the producer surplus?

area A + area B + area C

area A + area F

area B + area C + area D + area F

area C + area D + area E + area G

area F

Solution

Solution-

The above figure shows the domestic market for tomatoes. Suppose this market is isolated from global competition and there is a support price set at $16. In this figure, what area equals the producer surplus?

The correct option is E. area F.

Reason-

The area of producer surplus is lower triangle, consumer surplus is upper triangle and middle rectangle is tax revenue.