Question: Consumer and Producer Surplus Given a demand function p = f ( q ) and a supply function p = g ( q ) ,

Consumer and Producer Surplus Given a demand function p = f(q) and a supply function p = g(q), and the equilibrium point (q*, p*) The consumer surplus = The producer surplus = The sum of the consumer surplus and producer surplus is the total gains from trade. What are the units of consumer and producer surplus? The units are (price units)(quantity units)= money! Example:The demand and supply functions for a certain product are given by p=150-.5q and p=.002q^2+1.5. where p is in dollars and q is the number of items. a. Find the equilibrium point. b. Find the consumer surplus at the equilibrium price. c. Find the producer surplus at the equilibrium price.

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