In a market the demand curve is given by P = 120 - 2q and supply by P = q.What is CS in the market equilibrium?
A)CS = 3200
B)CS = 1600
C)CS = 3600
D)CS = 800
E)None of the above.

Question

Quizplus · Accepted Answer

To find the consumer surplus (CS) at market equilibrium, first find the equilibrium quantity (q) and price (P) by setting demand equal to supply: 120 - 2q = q, solving gives q = 40 and P = 40. CS is the area of the triangle above the price level and below the demand curve: CS = 0.5 * (base * height) = 0.5 * (40 * (120 - 40)) = 1600.

In a Market the Demand Curve Is Given by P