Sir Plus has a demand function for mead that is given by the equation D(p)  100  p.If the price of mead is $85, how much is Sir Plus's net consumer's surplus?

A) 15
B) 225
C) 56.25
D) 112.50
E) 7,650

Question

Lorna Lovett · Accepted Answer

Final Answer : D, Explanation :  Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. The demand function D(p) = 100 - p gives the maximum price Sir Plus is willing to pay for each unit of mead. At a price of $85, the quantity demanded is D(85) = 100 - 85 = 15 units. The area of the triangle that represents consumer surplus on a demand curve graph is 1/2 * base * height = 1/2 * 15 * (100 - 85) = 1/2 * 15 * 15 = 112.50.

Sir Plus has a demand function for mead that is given by the equation D(p)  100  p.If the price of mead is $85, how much is Sir Plus's net consumer's surplus?

A) 15
B) 225
C) 56.25
D) 112.50
E) 7,650

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Sir Plus has a demand function for mead that is given by the equation D(p)  100  p.If the price of mead is $85, how much is Sir Plus's net consumer's surplus?A) 15B) 225C) 56.25D) 112.50E) 7,650

Definitions

Learning Objectives

Learning Objectives

Related questions

Sir Plus has a demand function for mead that is given by the equation D(p)  100  p.If the price of mead is $85, how much is Sir Plus's net consumer's surplus?

A) 15
B) 225
C) 56.25
D) 112.50
E) 7,650