Please ignore the last answer, I am not sure if that is correct or not, thanks!
ID: 1106411 • Letter: P
Question
Please ignore the last answer, I am not sure if that is correct or not, thanks!
The demand curve for product Xis given by Qxd 460 -4Px a. Find the inverse demand curve. Instruction: Enter all values as integers, or if needed, as a decimal. Qx Instructions: Enter your responses to the nearest penny (two decimal places). b. How much consumer surplus do consumers receive when Px $35? c. How much consumer surplus do consumers receive when P $25? d. In general, what happens to the level of consumer surplus as the price of a good falls? The level of consumer surplus Increases v/l as the price of a good fallsExplanation / Answer
a) Inverse demand curve:
Px = 115 - 0.25Qx (rearrange demand curve equation)
b)
Consumer surplus = (Y intercept of demand curve - Price) x Quantity/2
Price = $35, Q = 320
Y intercept = 115 (Q = 0)
CS = 80 x 320/2 = $12800
c)
Price = $25, Q = 360
CS = 90 x 360/2 = $16200
d)
The level of consumer surplus increases as the price of a good falls.