Using supply and demand curve analysis, the triangular area above ...

[justinmsk]

Using supply and demand curve analysis, the triangular area above the equilibrium price and under the demand curve is:
 a. consumer surplus.
  b. producer surplus.
  c. marginal cost.
  d. deadweight loss.

Question 2

Discuss how a market reaches equilibrium. How is it expressed graphically?

[Dominic]

Answer to Question 1

a

Answer to Question 2

Equilibrium exists at that one price in a market where the quantity demanded equals the quantity supplied. This is shown graphically at the point of intersection between demand and supply curves. At any price above equilibrium, a surplus is observed, which pushes the price down until equilibrium is established. Any price below equilibrium creates a shortage and the price rises until the shortage is eliminated.