Consumer and producer surplus when a market reaches the equilibrium pf supply and demand. Recall that consumer surplus equals the area above the price and under the demand curve and producer surplus equals the area below the price and above the supply curve. Thus the total area between the supply and demand curves up to the point of equilibrium represents the total surplus in this market. Equilibrium allocation of resources? Does it maximize total surplus? To answer these question keep in mind that when a market is in equilibrium the price determines which buyers and sellers participate in the market. Those buyers who value the good more than the price represented by the segment AE on the demand curve choose to buy the good buyers who value it less than the price (represented by the segment EB) do not. Similarly those sellers whose costs are less than price (represented by the segment CE on the supply curve) choose to produce and sell the good sellers who...