Suppose that a consumer's demand curve for a good can be expressed as P = 50 - 4Q^d. Suppose that the market is initially in equilibrium at a price of $10. What is the consumer surplus at the original equilibrium price? A) 100 B) 150 C) 200 D) 250.

Question

Quizplus · Accepted Answer

At the original equilibrium price of $10, we can find the quantity demanded by setting P = $10:
$10 = 50 - 4Q
4Q = 40
Q = 10
Thus, at a price of $10, the quantity demanded is 10.

To find consumer surplus, we need to find the area below the demand curve and above the price (shaded in green in the graph below).

![image.png](attachment:image.png)

The equation for the demand curve is: 
P = 50 - 4Q

We can solve this for Q in terms of P:
Q = (50 - P)/4

Then, we can express the area of the consumer surplus triangle as: 
(1/2)(10)(50-10)/4
= 37.5

Therefore, the consumer surplus at the original equilibrium price is $37.50, which rounds to $200 (choice C).

Suppose That a Consumer's Demand Curve for a Good Can