For a demand curve and supply curve diagram you are told the equilibrium price i

Question

For a demand curve and supply curve diagram you are told the equilibrium price is $86 and the equilibrium quantity is 1,800. If the highest price a consumer would pay is $142 and the lowest price a producer would sell this product at is $16, calculate the consumer and producer surpluses. Consumer Surplus Equals: $100,400 Producer Surplus Equals: $126,000 O Consumer Surplus Equals: $50,400 Producer Surplus Equals: $63,000 Consumer Surplus Equals: $50,200 Producer Surplus Equals: 113,200 None of the Above

Explanation / Answer

Option (4).

Consumer surplus = Equilibrium quantity x (Maximum willingness to pay - Equilibrium price)

= 1,800 x $(142 - 86) = 1,800 x $56

= $100,800

Producer surplus = Equilibrium quantity x (Equilibrium price - Minimum acceptable price)

= 1,800 x $(86 - 16) = 1,800 x $70

= $126,000

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