How to find consumers' surplus given marginal cost, marginal revenue and a demand curve?
How to find consumers' surplus given marginal cost, marginal revenue and a demand curve?
Homework Answers
Ans. You can easily calculate consumer surplus using these details ,
First of all , we'd equate MR and MC to find the equilibrium price or quantity , and then find the value of MC , by this , we can get the Price because in perfect competition , P = MC.
Now , consumer surplus is the , Maximum amount which consumer is willing to pay - The price being charged from the consumer.
So we now know the price being charged and we can find the Maximum price which the consumer is willing to pay , from the Demand Function. The constant numeric real number present at the last in the demand function is the maximum amount which the consumer is willing to pay.
If you need any further clarity , do tell me in the comment section , I'll explain with an example.
Best of Luck !! !!
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