Question

Suppose that a market is perfectly competitive. The supply and demand functions are given below: Qd = 12-P Qs = -6 +2P In equilibrium, the dollar value of total surplus to the participants in the market is: $27 $54 $36 O $75

Answer 1

Ans. A. $27

Aus. A. $27 Demand function, Od = 12-p supply Function, Os= -6+2p At the Equilibrium, Demand = supply 12-P. -6+2p 12 +6=2p+P 18= 3P 6 =P 'p = $6 Equilibrium price and Od = 12 - 6 6 unita Equilibrium quantity Os 2-6 + 26) - Gunito P(S) 0 Consumer Stephen = az x 62-6)*6 $12 CS $18 Consumer surplus h ® Producer Surplus = £x (86-83) x 6 $6 Producer surplus ps = $9 $3 D 6 ② Total surplus (Ts) = consumer surplus (cs) + Peroduas surplus (ps) ol unita) $11 + $9 L TS - $27