Scenario 16-3
Suppose market demand for a product is given by the equation P = 20 - Q. For this market demand curve, marginal revenue is MR = 20 - 2Q.
-Refer to Scenario 16-3.If the marginal cost of producing this good is 0,how much total consumer surplus would consumers receive in this market?

Question

Quizplus · Accepted Answer

At equilibrium, marginal revenue equals marginal cost. 
Given that the marginal cost is 0, we have: 20 - 2Q = 0, which gives Q = 10.
Plugging Q = 10 into the demand function, we get: P = 20 - Q = 10.
Therefore, the market equilibrium price and quantity are P = 10 and Q = 10.
Total consumer surplus is the area below the demand curve and above the equilibrium price, which is the triangle with base 10 and height 10, giving an area of (10*10)/2 = 50. Therefore, the answer is C.

Scenario 16-3 Suppose Market Demand for a Product Is Given by the by the Equation