Answer to Question #273948 in Microeconomics for nanz

Question #273948

The demand function is p = 100/q and an increase in price reduces quantity demanded from q = 10 to q =5. Compute the lost consumer surplus (CS). First draw a diagram that illustrates the lost CS. Then integrate with respect to 𝑝 (the variable on the vertical axis) after finding

(1) the inverse demand function , 𝑞 =𝑓 (𝑝) and

(2) the endpoints of integration (corresponding to q = 10 to q = 5 ) on the

𝑝 axis .



1
Expert's answer
2021-12-01T10:15:37-0500

 Diagram that illustrates the lost CS




Given P =20 and q = 5 ; When P=10 q = 10


So change in in CS "= \u222b^{10}_{5} 100q^{-1}\\delta q"


"= 100ln(q) \u2308^{10}_{5} = -100(ln(10)-ln(5)) =100(ln(2))"

 

inverting the demand function we get "q=\\frac{100}{p}"


the integral then becomes;

"\u222b^{10}_{5}\\frac{100}{p} = 100(ln20 -ln10) = -100ln(2)"


Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be the first!

Leave a comment

LATEST TUTORIALS
New on Blog
APPROVED BY CLIENTS