Suppose the demand function for a product is x thousand units per week and the corresponding wholesale price, in dollars, is Determine the consumers' surplus if the wholesale market price is set a t$12per unit

Economics Dec 17, 2020

Suppose the demand function for a product is x thousand units per week and the corresponding wholesale price, in dollars, is Determine the consumers' surplus if the wholesale market price is set a t$12per unit.

Expert Solution

First calculate the maximum amount consumers would be willing to pay, set Q=0 and that would be sqrt 184 which is 13.56. There is a consumer surplus since market price is 12. consumer surplus = 1/2 (13.56 - 12) X (1000)) = 1/2 (1.56 X 1000) = 780.

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