Table 4-12

-Refer to Table 4-12. The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of consumer surplus?

Question

Table 4-12
 
-Refer to Table 4-12. The equations above describe the demand and supply for Bubba's Fried Jellybeans. The equilibrium price and quantity for Bubba's Fried Jellybeans are $40 and 5 thousand units. What is the value of consumer surplus?

Quizplus · Accepted Answer

Consumer surplus is calculated as the area of the triangle above the equilibrium price and below the demand curve. With a price of $40 and quantity of 5 thousand units, the consumer surplus is (1/2) * (base * height) = (1/2) * (5 * (80-40)) = $25 thousand.

Table 4-12 -Refer to Table 4-12. the Equations Above Describe the Demand