Question

Table 7-16 Quantity Demanded Quantity Supplied 36 30 Price $12.00 $10.00 $ 8.00 $6.00 $ 4.00 $ 2.00 $ 0.00 10 3 6 24 18 12 6 12 15 18 0 60. Refer to Table 7-16. Both the demand curve and the supply curve are straight lines. If the price is $4 but only 6 units are bought and sold, consumer surplus will be a. $21. b.$28. C. $36

Answer 1

Answer 60

the correct answer is (c) $36.

Straight lie is given by :

(Y - Y₀) = ((Y₁ - Y₀)/(X₁ - X₀))(X - X₀)

Here Y represents Price(P) and X Represents Quantity(Q)

So we have

(P - P₀) = ((P₁ - P₀)/(Q₁ - Q₀))(Q - Q₀)

Take and two combination of (Q,P) from the demand schedule.

We have, (Q₀,P₀) = (0,12) And (Q₁,P₁) = (18,0)

=> (P - 12) = ((0 - 12)/(18 - 0))(Q - 0)

=> P = 12 - (2/3)Q

Consumer surplus is the benefit consumer receives by paying less than what they are willing to pay.

Mathematically consumer surplus = Area below demand curve and above price line(Here P = 4).

So, Area below demand curve and above P = 4 till quantity = 6(as 6 units are consumed.

Area of trapezium = (1/2)Height(Sum of parallel)

Note when Q = 0, P = 12(vertical intercept)

When Q = 6, amount he is willing to pay is 8

Here height = 6, Two parallel sides are = 12 - 4 = 8 and 8 - 4 = 4

=> consumer surplus = Area below demand curve and above price line = (1/2)*6*(8 + 4) = 36

Thus, Consumer surplus = 36.

Hence, the correct answer is (c) $36.

Answer 2

got $36 also