Answer to Question #220783 in Microeconomics for Rahul jain

Question

Exercise 2: Calculate consumer surplus for the demand curve P=1-Q and the supply curve P=1+Q 

Answer 1

Given :

demand curve : $P = 1 - Q$

Supply curve : $P = 1 + Q$

Equilibrium is attained where demand equals the supply ie,

$1 - Q = 1 + Q$

$2Q = 0$

$Q = 0$

$P = 1$

Consumer Surplus = $\frac {1} {2} × Quantity ×( Consumer willingness to pay - Price actually paid)$

Consumer Surplus = $\frac {1} {2} × 0$

Consumer Surplus = 0

Thus, Consumer surplus is 0.