Sir Plus has a demand function for mead that is given by the equation D(p)= 100 - p.If the price of mead is $60, how much is Sir Plus's net consumer's surplus?
A)$40
B)$800
C)$1,600
D)$400
E)$3,900

Question

Quizplus · Accepted Answer

The consumer surplus is calculated as the area of the triangle formed by the demand curve, the price line, and the vertical axis. The demand function is D(p) = 100 - p. At a price of $60, the quantity demanded is 100 - 60 = 40. The consumer surplus is the area of a triangle with a base of 40 (from 0 to 40 units) and a height of 40 (from the price of 60 up to the intercept of 100). The formula for the area of a triangle is 1/2 * base * height, so the consumer surplus is 1/2 * 40 * 40 = 800.

Sir Plus Has a Demand Function for Mead That Is