Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / A town wants to repair its swimming pool
A town wants to repair its swimming pool. The annual demand from each of its 5,000 citizens in terms of uses is q = 15 - 3p, where p is the price (in dollars) charged for using the pool. Suppose that the price of admission is $2. How much consumer surplus does this pricing strategy generate?
A. a consumer surplus of $15.5 per customer
B. a consumer surplus of $65 per customer
C. a consumer surplus of $13.5 per customer
D. a consumer surplus of $37 per customer
E. none of the above
Option C. a consumer surplus of $13.5 per customer is correct
This option is correct because
As we know
Inverse demand function
q =15-3p
q =15-3(2)
q =15-6
q =9 units
Put q=0
q =15-3p
0 =15-3p
p =5
Consumer surplus (CS)
CS = 0.5*(change in price)*(change in quantity)
CS = 0.5*(5-2)*(9)
CS = 13.5
