The demand curve for product X is given by Q X d = 460 - 4P X . a. Find the inve
ID: 1168358 • Letter: T
Question
The demand curve for product X is given by QXd = 460 - 4PX.
a. Find the inverse demand curve.
PX = - QXd
Instructions: Round your answer to the nearest penny (2 decimal places).
b. How much consumer surplus do consumers receive when Px = $35?
$
c. How much consumer surplus do consumers receive when Px = $25?
$
d. In general, what happens to the level of consumer surplus as the price of a good falls?
The level of consumer surplus (Click to select)doesn't changeincreasesdecreases as the price of a good falls.
Explanation / Answer
a) QXd = 460 - 4PX.
Px =115 -.25Qd
b)
Qd =460 -4*35
=460 -140
=320
CS = .5 (115 -36)*320
=12,640
c) Q =460 -4*25
=360
CS =.5(115-25)*360
=32,400
d) When the price falls, the consumer surplus increases since consumer is able to consume more quantity.
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