65 538
Assignments Done
99,2%
Successfully Done
In October 2018

Answer to Question #43287 in Microeconomics for asdaasd

Question #43287

Suppose that a good is in perfectly elastic supply at price of RM5.00. The market demand curve for this good is linear, with zero quantity demanded at a price of RM25.00. If the slope of this linear demand curve is -0.25 draw a supply and demand graph to illustrate the consumer surplus that occurs when the market is in equilibrium.
Expert's answer
If Ed = -0.25 and quantity demanded is zero at P = $25, then Qd = 25 - 0.25P.
As Qs = 5, in equilibrium Pe = $5. Qe = 25 - 0.25*5 = 23.75 units.
Consumer surplus = 0.5*23.75*(25 - 5) = $237.5.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be first!

Leave a comment

Ask Your question

Submit
Privacy policy Terms and Conditions