Suppose the demand and supply curves for good X are both linear. And, the demand price for the first unit of X is $28, and the supply price for the first unit of X is $6. If the equilibrium price for good X is $16 and the equilibrium quantity of X is 24,000 units, then total consumer surplus is $________, total producer surplus is $_________, and total social surplus is $_____________.

Question

Quizplus · Accepted Answer

Consumer surplus is calculated as the area of the triangle above the equilibrium price and below the demand curve: (1/2) * (28 - 16) * 24,000 = $144,000. Producer surplus is the area of the triangle below the equilibrium price and above the supply curve: (1/2) * (16 - 6) * 24,000 = $120,000. Total social surplus is the sum of consumer and producer surplus: $144,000 + $120,000 = $264,000.

Suppose the Demand and Supply Curves for Good X Are