I am unsure how to do part CFor instance, I am confused if the answer for the private consumer surplus is 20,000 (1/2 (20x2000) OR if it is 5,000 (1/2 (10x1000). Question 3A local tailor has two types of customers, private customers and department stores. The market ofprivate customers has a demand given by Qp = 2000 – 100P, and the market of department stores=has a demand given by Qsequal to zero.4000 100P. The marginal cost of one more alteration is constant and(a)(b) What is the value of each demand's elasticity at the optimal price level?(c) What is the total consumer surplus (for both groups)?(d)Suppose that the tailor can charge different prices to each type of customer. What are theoptimal prices? What is the total profit?Suppose that a regulation prohibits price discrimination. What is the optimal (uniform)price when the markets are combined? How much does the regulation cost the tailor interms of forgone profits?(e) What happens to consumer surplus?

Given Private customer's demand: QP=2000-100P .... (1) The market of department stores demand:…

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(c) What is the total consumer surplus (for both groups)?

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Chapter1: Making Economics Decisions

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Question

I am unsure how to do part C

For instance, I am confused if the answer for the private consumer surplus is 20,000 (1/2 (20x2000) OR if it is 5,000 (1/2 (10x1000).

Question 3
A local tailor has two types of customers, private customers and department stores. The market of
private customers has a demand given by Qp = 2000 – 100P, and the market of department stores
=
has a demand given by Qs
equal to zero.
4000 100P. The marginal cost of one more alteration is constant and
(a)
(b) What is the value of each demand's elasticity at the optimal price level?
(c) What is the total consumer surplus (for both groups)?
(d)
Suppose that the tailor can charge different prices to each type of customer. What are the
optimal prices? What is the total profit?
Suppose that a regulation prohibits price discrimination. What is the optimal (uniform)
price when the markets are combined? How much does the regulation cost the tailor in
terms of forgone profits?
(e) What happens to consumer surplus?

Consumer’s gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price and up to the equilibrium quantity. Consumer surplus is represented by area A.

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