A market has a demand equation as follows: Qd = 100 –2P. The market price for the product is $20. Calculate the dollar amount of consumer surplus in this market and illustrate your answer graphically.
Hello. My question has to do with this equation:
A market has a demand equation as follows: Qd = 100 –2P. The market
I believe I understand how to calculate the equation. I would replace P with $20 and the equation would become 100 - 2 (20) = Qd. Then 100-40 = $60.
So, I think I have the correct answer as $60, but I am not sure how to illustrate it graphically. I also know that the (total) consumer surplus is defined as the shaded area beneath the demand curve and above the price. I believe I should show this $60 as an answer under a triangle, but I don't know how.
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