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The demand function for a commodity is p=35−2x−x2p = 35 - 2x - x^2, then the consumer's surplus at equilibrium price p0=20p_0 = 20 is

Solution

✅ Correct Option: 3

The equilibrium price is p0=20p_0 = 20.

The demand function is p=35−2x−x2p = 35 - 2x - x^2.

Setting p=20p = 20:

20=35−2x−x220 = 35 - 2x - x^2

x2+2x−15=0x^2 + 2x - 15 = 0

(x+5)(x−3)=0(x + 5)(x - 3) = 0

This gives x=−5x = -5 or x=3x = 3.

Since quantity cannot be negative, x0=3x_0 = 3.


Consumer's surplus is given by:

CS=∫0x0(35−2x−x2) dx−p0⋅x0CS = \int_0^{x_0} (35 - 2x - x^2) \, dx - p_0 \cdot x_0

CS=∫03(35−2x−x2) dx−20×3CS = \int_0^3 (35 - 2x - x^2) \, dx - 20 \times 3


Evaluating the integral:

∫03(35−2x−x2) dx=[35x−x2−x33]03\int_0^3 (35 - 2x - x^2) \, dx = \left[35x - x^2 - \frac{x^3}{3}\right]_0^3

At x=3x = 3:

=35(3)−(3)2−(3)33= 35(3) - (3)^2 - \frac{(3)^3}{3}

=105−9−9= 105 - 9 - 9

=87= 87

At x=0x = 0: the value is 00.

Therefore, ∫03(35−2x−x2) dx=87\int_0^3 (35 - 2x - x^2) \, dx = 87


Consumer's surplus:

CS=87−60CS = 87 - 60

CS=27CS = 27

Therefore, the consumer's surplus at equilibrium price p0=20p_0 = 20 is 2727.

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