(a) The inverse demand function for taxi-apps is estimated to be $ p = 100 - 2Q $. If the price increases from 20 to 30, then by how much does consumer surplus change?### Explanation:To determine the change in consumer surplus when the price changes, we need to calculate the consumer surplus at both prices and find the difference.1. **Consumer Surplus at $ p = 20 $:** - Solve for $ Q $ when $ p = 20 $: \[ 20 = 100 - 2Q \implies 2Q = 80 \implies Q = 40 \] - Consumer surplus is the area of the triangle formed above the price line and below the demand curve from $ Q = 0 $ to $ Q = 40 $: - Height of the triangle: $ 100 - 20 = 80 $ - Base of the triangle: $ Q = 40 $ - Area (consumer surplus) = $\frac{1}{2} \times \text{base} \times \text{height} = \frac{1}{2} \times 40 \times 80 = 1600 $2. **Consumer Surplus at $ p = 30 $:** - Solve for $ Q $ when $ p = 30 $: \[ 30 = 100 - 2Q \implies 2Q = 70 \implies Q = 35 \] - Consumer surplus is the area of the triangle formed above the price line and below the demand curve from $ Q = 0 $ to $ Q = 35 $: - Height of the triangle: $ 100 - 30 = 70 $ - Base of the triangle: $ Q = 35 $ - Area (consumer surplus) = $\frac{1}{2} \times \text{base} \times \text{height} = \frac{1}{2} \times 35 \times 70 = 1225 $3. **Change in Consumer Surplus:** - Change = Consumer Surplus at $ p = 30 $ - Consumer Surplus at $ p = 20 $ - Change = $ 1225 - 1600 = -375 $Thus, the

A consumer surplus happens when the price that consumers pay for a product or service is less than…

Answered: a) The inverse demand function for…

a) The inverse demand function for taxi-apps is estimated to be p = 100-2Q. If the price increases from 20 to 30, then by how much does consumer surplus change?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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