Table 4-5

-Refer to Table 4-5.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?

Question

Table 4-5
 
-Refer to Table 4-5.The equations above describe the demand and supply for Chef Ernie's Sushi-on-a-Stick.The equilibrium price and quantity for Chef Ernie's sushi are $60 and 20 thousand units.What is the value of consumer surplus?

Quizplus · Accepted Answer

The consumer surplus is the area above the equilibrium price and below the demand curve. The triangle in Table 4-5 has a base of 20 thousand units (the equilibrium quantity) and a height of $40 ($100 - $60, the difference between the maximum price consumers are willing to pay and the equilibrium price). Therefore, the consumer surplus is equal to 1/2 x 20,000 x $40 = $400,000. Therefore, the correct answer is B, $200 thousand (since the question is asking for the value of only the consumer surplus).

Table 4-5 -Refer to Table 4-5.The Equations Above Describe the Demand and Describe