In: Economics
A demand curve is given by P=50-2Q. If the government gives away this good for free what is the consumer surplus?
P = 50- 2Q
So if Q = 0 , we have y intercept as P = 50 .
So now if government give away this food for free , then food price will be 0 .
So at Price = 0 , Q = 25 units
Consumer surplus = 1/2 * 50 * 25
= 25*25 = $625 will be consumer surplus