**Understanding Consumer Surplus in Market Equilibrium**In this exercise, we explore the concept of consumer surplus using supply and demand curves. **Problem Statement:**Suppose there is:- A downward sloping demand curve with a y-intercept of 70.- An upward sloping supply curve with a y-intercept of 20.Given:- The competitive equilibrium price is $32.- The equilibrium quantity is 52.**Question:**What is the size of the overall consumer surplus in this market? (Round your answer to two decimal places.)**Explanation:**To calculate consumer surplus, we first need to determine the area of the triangle formed by the demand curve above the equilibrium price line.1. **Identify the maximum willingness to pay:** This is represented by the y-intercept of the demand curve, which is 70.2. **Equilibrium price:** This is given as 32.3. **Equilibrium quantity:** This is given as 52.**Formula for Consumer Surplus:**Consumer Surplus = 0.5 × (Base of the triangle) × (Height of the triangle)**Calculations:**- **Base of the triangle** = Equilibrium Quantity = 52- **Height of the triangle** = Maximum willingness to pay (y-intercept of demand) - Equilibrium Price = 70 - 32 = 38Consumer Surplus = 0.5 × 52 × 38 = 988**Solution:**Thus, the overall consumer surplus for the market is 988.00.Note: The user's answer box input "30" is incorrect for the given data.

Consumer surplus is measured as the area below the downward-sloping demand curve or amount a consumer is willing to spend for given quantities of a good, and above the actual market price of the good, so here by drawing the graph we calculate the Overall consumer surplus which are as follow-

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Suppose there is a downward sloping demand curve that has a y-intercept of 70 and an upward sloping supply curve that has a y-intercept of 20. If the competitive equilibrium Price is 32 and Quantity is 52 what would be the size of the overall consumer surplus for this market? (Please answer to 2 decimal places as needed) Your Answer: 30 Answer

Suppose there is a downward sloping demand curve that has a y-intercept of 70 and an upward sloping supply curve that has a y-intercept of 20. If the competitive equilibrium Price is 32 and Quantity is 52 what would be the size of the overall consumer surplus for this market? (Please answer to 2 decimal places as needed) Your Answer: 30 Answer

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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