If QD301 4P and QS 408 64P What is the consumer surplus i

If Q_D=301 - 4P and Q_S = -408 + 64P

What is the consumer surplus in this market?

(ROUND TO TWO DECIMAL PLACES)

Solution

Finding equilibrium point ep =

Qd=Qs

301-4p=-408+64p

P=10.3

Now putting value of p in demand equation

Price =301-4×10.3

=287.8

Consumer surplus =area between equilibrium and demand

Now plotting the graph and finding base = 408-301 =107 and height =10.3

Now area of the region =area under the triangle

=1/2× base×height

=1/2×107×10.3

Approximately equal to 535

Note while plotting demand graph slope is always positive

And in supply graph slope is always negative