Demand is given by Q=9-P. If price is $4, what is the consumer surplus from the third unit of the good?
Consumer surplus is the amount a person would pay less the amount he/she actually pays. So, using algebra, rewrite the demand equation as P=9-Q. The person buying the 3rd unit would be willing to pay $6. So, the consumer surplus is .......
To find the consumer surplus, we need to calculate the amount the person would be willing to pay and subtract the actual price paid for the good.
The demand equation Q = 9 - P can be rewritten as P = 9 - Q.
Since the price is given as $4, we can substitute P = 4 into the equation to find the quantity Q.
4 = 9 - Q
Rearranging the equation, we get:
Q = 9 - 4
Q = 5
So, the quantity demanded for the third unit is 5.
Now, to find the consumer surplus for the third unit, we need to calculate the difference between the person's willingness to pay and the actual price paid.
The person buying the third unit would be willing to pay $6, as determined by substituting Q = 5 into the demand equation: P = 9 - Q.
Willingness to pay = $6
Actual price paid = $4
Consumer surplus = Willingness to pay - Actual price paid
= $6 - $4
= $2
Therefore, the consumer surplus from the third unit of the good is $2.