# Question 5 Suppose that the cost function of a firm is C(q)=4q. Suppose that this is the only firm in the market, and demand is Q(p)=10-p. What is the Consumer Surplus in a competitive equilibrium in this economy? 1836201215

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Question 5
Suppose that the cost function of a firm is C(q)=4q. Suppose that this is the only firm in the market, and demand is Q(p)=10-p. What is the Consumer Surplus in a competitive equilibrium in this economy?

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Step 1

Consumer surplus refers to an overall benefit that receives the consumer by paying a price lower than what they would be willing to pay.

Step 2

Consumer surplus in a competitive equilibrium in the given economy can be calculated by using the following formula.

Step 3

Because in competitive equilibrium P = MC. This implies that profit maximization price is P=4.

Consumer surplus is repre...

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