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If under pure competition demand and supply functions are given by p=10−xp = \sqrt{10 - x} and p=12(x−2)p = \frac{1}{2}(x-2) respectively, where pp is price per unit and xx is quantity, then the consumer surplus is:

Solution

✅ Correct Option: 3

To find the Consumer Surplus (CS), we first need to determine the equilibrium point (x0,p0)(x_0, p_0) where the demand and supply curves intersect.

Set the demand function equal to the supply function:

10−x=12(x−2)\sqrt{10 - x} = \frac{1}{2}(x - 2)

Square both sides to solve for xx:

10−x=14(x−2)210 - x = \frac{1}{4}(x - 2)^2

40−4x=x2−4x+440 - 4x = x^2 - 4x + 4

x2=36⇒x0=6x^2 = 36 \Rightarrow \mathbf{x_0 = 6}

(We take the positive root as quantity cannot be negative).

Now, find the equilibrium price p0p_0 by substituting x0x_0 into the supply equation:

p0=12(6−2)=2p_0 = \frac{1}{2}(6 - 2) = \mathbf{2}


The formula for Consumer Surplus is:

CS=∫0x0f(x) dx−(p0⋅x0)CS = \int_{0}^{x_0} f(x) \, dx - (p_0 \cdot x_0)

Where f(x)=10−xf(x) = \sqrt{10 - x}.

CS=∫0610−x dx−(2⋅6)CS = \int_{0}^{6} \sqrt{10 - x} \, dx - (2 \cdot 6)

Let u=10−xu = 10 - x, then du=−dxdu = -dx.

∫10−x dx=−(10−x)3/23/2=−23(10−x)3/2\int \sqrt{10 - x} \, dx = -\frac{(10 - x)^{3/2}}{3/2} = -\frac{2}{3}(10 - x)^{3/2}


Evaluate from 0 to 6:

[−23(10−6)3/2]−[−23(10−0)3/2]\left[ -\frac{2}{3}(10 - 6)^{3/2} \right] - \left[ -\frac{2}{3}(10 - 0)^{3/2} \right]

=−23(4)3/2+23(10)3/2= -\frac{2}{3}(4)^{3/2} + \frac{2}{3}(10)^{3/2}

=−23(8)+23(1010)=2010−163= -\frac{2}{3}(8) + \frac{2}{3}(10\sqrt{10}) = \frac{20\sqrt{10} - 16}{3}

Subtract the rectangle area (p0⋅x0=12p_0 \cdot x_0 = 12):

CS=2010−163−12CS = \frac{20\sqrt{10} - 16}{3} - 12

CS=2010−16−363CS = \frac{20\sqrt{10} - 16 - 36}{3}

CS=2010−523CS = \frac{20\sqrt{10} - 52}{3}

Factor out a 2:

CS=23[1010−26]CS = \boxed{\frac{2}{3}[10\sqrt{10} - 26]}

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