Question

Suppose that in a perfectly competitive market, demand is given by Q=63.0-P and supply is given by Q=P-9.0. What is aggregate surplus in the competitive market equilibrium? No units, no rounding.

Answer 1

demand $ = 63 - P Supply g = 1-9 At lequilibrium . 1. Demand = Supply So, 63-P = P-9 So, 63+9 = ptP -> 2f = 42 px - 742 p* = 36 1. 50, 8 = 63-1 = 63 - 36 * = 27 he know , Aggregate Busflus = Censuee busplus (cs) Producer Surplus (ps)

Consumer Surpurs (es) cs =ų (lowe - pH) x 0 Prane is op at 8=0 in Dimand function So, & = 63-P At B=0 63-P = 0 So, I bouan = 637 to, 65 = { (63 – 36) x 27 New Producer Surplus (rs) 28 = { clean - * huin is at p at Q=0 in Suffly function At Q =0 p-q =0

- 1 x 24 x 27 729 Bo, PS 1X (269) apy .. JPS = 1 * 27 * 27 = tema Aggregate Susplus = CS + PS - 1929 + 729 - Aggregate Surplus = 929 | UKKIAUS
Hence, Aggregate Surplus at Competitive Market Equilibrium is 729