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Consider a product whose demand function is D(q) = 900 − 20q − q2 (in dollars)...

Consider a product whose demand function is D(q) = 900 − 20q − q² (in dollars) and whose supply function is S(q) = q² + 10q (in dollars) for producing q items.

(a) Find the consumers’ surplus.

(b) Find the suppliers’ surplus.

Expert Solution

a)

we have

At equilibrium

production never negative,

the price,

the equilibrium (p₀, x₀) = (375, 15)

the formula for the consumer surplus,

put p₀ = 375 and x₀ = 15,

b)

the formula for the producers surplus,

put p₀ = 375 and x₀ = 15,

milcah answered 2 years ago

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