Market demand for Mandrake roots is given by Q=477-5P and market supply is given by Q=5P. The government imposes a price ceiling of $20. What is the Consumer Surplus in the market with the price ceiling

Market demand for Mandrake roots is given by Q=477-5P and market supply is given by Q=5P. The government imposes a price ceiling of $20. What is the Consumer Surplus in the market with the price ceiling

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter4: Prices: Free, Controlled, And Relative

Section: Chapter Questions

Problem 4WNG

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Question

Market demand for Mandrake roots is given by Q=477-5P and market supply is given by Q=5P.

The government imposes a price ceiling of $20. What is the Consumer Surplus in the market with the price ceiling?

Consumer’s gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price and up to the equilibrium quantity. Consumer surplus is represented by area A.

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