Identifying surplus areas in supply-demand equilibrium

Steps:

• Identify new equilibrium at intersection of supply and demand curves, forming point J.
• Consumer surplus is triangle above equilibrium price (line MJ) and below demand curve (to point F).
• Producer surplus is triangle below equilibrium price (line MJ) and above supply curve (to point H).
• Match areas: FMH for consumer surplus, HMJ for producer surplus.

Why A is correct:

• FMH and HMJ represent the standard triangular areas for consumer and producer surplus per economic definitions.

Why the others are wrong:

• B: KNJ includes deadweight loss, not pure producer surplus.
• C: JMK mixes equilibrium price line with unrelated supply area.
• D: KNRO adds extraneous rectangle below supply curve.

Final answer: A