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 fq and a supply function p gq 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 unitsquantity units money! Example:The demand and supply functions for a certain product are given by pq and pq 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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