Sir Plus has a demand function for mead that is given by the equation D(p) = 100 - p. If the price of mead is $90, how much is Sir Plus's net consumer's surplus?

Question

Quizplus · Accepted Answer

First, we need to find the quantity of mead demanded at a price of $90:
D(90) = 100 - 90 = 10
So, at a price of $90, Sir Plus sells 10 units of mead.

Next, we need to find the maximum amount that consumers are collectively willing to pay for these 10 units of mead. We can do this by calculating the area of the triangle formed by the demand curve, the vertical axis (quantity), and a horizontal line at $90:

Consumer's surplus = (1/2)base*height
                        = (1/2)(10)(10)
                        = $50

Therefore, the net consumer's surplus for Sir Plus at a price of $90 is $50.

Sir Plus Has a Demand Function for Mead That Is