Let’s do a basic welfare comparison between consumers and pr…
Let’s do a basic welfare comparison between consumers and producers in a market for widgets. Say that the relationship between the quantity of widgets supplied and the price is given by the equation qS = p – 120, while quantity demanded is given by the equation qD = 240 – p. Solve for the equilibrium price, p*, and the equilibrium number of widgets sold, q*. Then calculate consumer surplus using the formula CS =