Question

Suppose that you are the vice president of operations of a manufacturing firm that sells an industrial lubricant in a competitive market. Further suppose that your economist gives you the following supply and demand​ functions: ​Demand: Upper Q Superscript Upper D ​= 45 minus 2 Upper P ​Supply: Upper Q Superscript Upper S ​= negative 15 plus Upper P. What is the consumer surplus in this​ market? Consumer surplus is ​$ 20.25. ​ (Enter your response rounded to two decimal​ places.)

Answer 1

Answer:

400

Explanation:

Qd = 45 - 2P

Qd    = -15 + P

45 - 2P = P - 15

60 = 3P

60/3 = P = 20

Q = 45 - 2*20 = 5

Q = -15+20 = 5

The quantity will be 5 and price 20

Now we will caclulate the consumer surplus:

Which the area of the demand curve above the equilibrium.

We calculate he area of a triangle:

base x high / 2

$\frac{(45-5)\times20}{2}$

consumer surplus = 400