Will Rate High! The demand curve for product X is given byQ d x =460-4P x a. Fin

Question

Will Rate High! The demand curve for product X is given byQdx =460-4Px a. Find the inverse curse demand curve b. How much consumer surplus do consumer reccive whenPx=$35 c. How much consumer surplus do consumer receive whenPx= $25 d. In general what happens to the level of consumer surplus asthe price of a good falls? Will Rate High! The demand curve for product X is given byQdx =460-4Px a. Find the inverse curse demand curve b. How much consumer surplus do consumer reccive whenPx=$35 c. How much consumer surplus do consumer receive whenPx= $25 d. In general what happens to the level of consumer surplus asthe price of a good falls? a. Find the inverse curse demand curve b. How much consumer surplus do consumer reccive whenPx=$35 c. How much consumer surplus do consumer receive whenPx= $25 d. In general what happens to the level of consumer surplus asthe price of a good falls?

Explanation / Answer

a) Using the demand curve, Q = 460 - 4P, we should solve for P andthat will give us the inverse demand curve (aka the Pricecurve): 4P = 460 - Q P = 115 - Q/4 b) Consumer Surplus = 1/2(a - P), where P = 35 in this case, and ais the constant term in your Q = 460-4p (ie 460) CS = 1/2 (460 - 35) CS = 1/2 (425) CS = 212.5 c) I'll leave it to you to answer this using the formula above d) As the price falls, the consumer surplus increases becausepeople are getting more utility from a product that is gettingcheaper!

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