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Homework answers / question archive / Assume the inverse demand function for a good can be written as: P = 30 - 2Q and Assuming also that P = $10 then resulting consumer surplus would be equal to in dollar terms:
Assume the inverse demand function for a good can be written as: P = 30 - 2Q and Assuming also that P = $10 then resulting consumer surplus would be equal to in dollar terms:
Computation of the consumer surplus:-
P = 30 - 2Q
10 = 30 - 2Q
2Q = 30 - 10
Q = 20 / 2
= 10
Lets assume Q = 0, then
P = 30 - 2Q
P = 30 - (2*0)
P = $30
Consumer surplus = (1/2) * (30 - 10) * 10
= 0.5 * 20 * 10
= $100
