Answered: The demand for the Tesla electric…

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter6: Elasticity

Section: Chapter Questions

Problem 11QP: Suppose you learned that the price elasticity of demand for wheat is 0.7 between the current price...

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The demand for the Tesla electric automobile is P = 200,000 – 2Q, where P is in $/car and Q is the number of cars sold per year

The supply of the Tesla is P = 20,000 + 10Q, P is in $/car and Q is the number of cars produced per year.

Find the equilibrium price and quantity of the car assuming there are no buyer subsidies. Also find consumer and producer surplus and total social welfare.

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

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