Answer to Question #288583 in Microeconomics for Lily

Question

P=20-2Q demand function and P=10+6Q Supply function calculate consumers' and producer's surplus

Answer 1

In equilibrium:

20 - 2Q = 10 + 6Q,

Q = 1.25 unit,

P = 20 - 2×1.25 = 17.5.

Consumer surplus is:

$CS = 0.5×1.25×(20 - 17.5) = 1.5625.$

$PS = 0.5×1.25×(17.5 - 10) = 4.6875.$