If y represents price measured in dollars and x represents q

If y represents price (measured in dollars) and x represents quantity purchased then what is the area or size of the triangle you see in the graph? Economic application -- Say you wanted to place a tax on a product that has this demand curve and in which price was $75 What would the revenue be raised by the tax (answer=$500) and the triangle represents lost value from the lesser available after the tax is imposed. So to raise $500 in tax revenue you lost how much in consumer value (answer-it is the area of the triangle) $1,000 $250 500 2000/2 = $1,000

Solution

Area of the triangle = (1/2) X Q X P

Area of the triangle = 1/2 X 80 X 125

A = $ 5000

-----------------------------------------------------------------------------------------------------------------------

Revenue = Price X quantity

At price of $ 75 , revenue = price X quantity

Revenue = $ 75 X 40

Revenue = $ 3,000

To rise the revenue by $ 5000 at the same price of $ 75

$ 3,500 = $ 75 X Q

Q = $ 3,500 / 75

Q = 46.666

Lost in consumer value = 1/2 X ( 46.66 - 40 ) X $ 75

Lost in consumer value = $ 250