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:

Economics Mar 20, 2021

Expert Solution

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

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