. Suppose the Demand for coffee is given by: Q=25-3p and the current market price is...
. Suppose the Demand for coffee is given by: Q=25-3p and the current market price is $3. Find the Consumer Surplus (CS). (3pts
Homework Answers
Answer
the demand function is:
Q=25-3P
P=3
Q=25-3*3=16
--------
Converting the demand function to its inverse
Q=25-3P
3P=25-Q
P=(25/3)-(1/3)Q
CS is the area above price and below the demand curve
CS=0.5*( Y-axis intercept of the demand curve -P)*Q
=0.5*((25/3)-3)*16
=$42.6666667
the CS is $42.67
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