The table shows the demand and supply schedules for sandwich

The table shows the demand and supply schedules for sandwiches. The equilibrium price of a sandwich is $ The consumer surplus from sandwiches is$ The efficientquantity of sandwiches is 120.

Solution

In equilibrium, quantity demanded equals quantity supplied.

That takes place when (efficient) quantity = 120 & price = $4.

Consumer surplus (CS) is the (triangular) area of difference between maximum price & equilibrium price, multiplied by equilibrium quantity.

So, CS = (1/2) x $(8 - 4) x 120 = (1/2) x $4 x 120 = $240

Producer surplus (PS) is the (triangular) area of difference between minimum price & equilibrium price, multiplied by equilibrium quantity.

So, CS = (1/2) x $(4 - 0) x 120 = (1/2) x $4 x 120 = $240