Answer to Question #220768 in Economics for Ishaq

Question

1. If the supply and demand functions are given by and , respectively, find the equilibrium price and quantity, and calculate the consumer’s and producer’s surplus.

Answer 1

The equilibrium price and quantity can be found at the point, for which quantity demanded equals quantity supplied.

The consumer’s is an area above the equilibrium price and below the demand curve, and producer’s surplus is an area below the equilibrium price and above the supply curve.