The market price of a good is $5 and 40 units of the good sell at this price. Its demand curve intersects the vertical axis at a price of $10 and has a constant slope. What is the approximate value of consumer surplus in this market?

Question

Quizplus · Accepted Answer

Consumer surplus is the area of the triangle formed by the demand curve, the price line, and the vertical axis. The height of the triangle is $10 - $5 = $5, and the base is 40 units. The area is (1/2) * base * height = (1/2) * 40 * 5 = $100.

The Market Price of a Good Is $5 and 40