If under pure competition demand and supply functions are given by $p = \sqrt{10-x}$ and $p =\frac{1}{2} (x-2)$ respectively, where p is price per unit and x is quantity, then the consumer surplus is: |
$\frac{2}{3} [11 - 10\sqrt{10}]$ $\frac{10}{3} [1 - 2\sqrt{10}]$ $\frac{2}{3} [10\sqrt{10}-26]$ $\frac{2}{3} [11 + 10\sqrt{10}]$ |
$\frac{2}{3} [10\sqrt{10}-26]$ |
The correct answer is Option (3) → $\frac{2}{3} [10\sqrt{10}-26]$ ** Demand function: $p=\sqrt{10-x}$ Supply function: $p=\frac{1}{2}(x-2)$ Step 1: Find equilibrium quantity $x_e$ Set demand = supply: $\sqrt{10-x}=\frac{1}{2}(x-2)$ Square both sides: $10-x=\frac{1}{4}(x-2)^{2}$ $40-4x=(x-2)^{2}$ $40-4x=x^{2}-4x+4$ $x^{2}-4x+4 = 40-4x$ $x^{2}-36=0$ $x=\sqrt{36}=6$ (positive quantity) Equilibrium price: $p_e=\frac{1}{2}(6-2)=2$ Step 2: Consumer Surplus CS = $\displaystyle \int_{0}^{6} \sqrt{10-x}\,dx \;-\; (p_e \cdot x_e)$ Compute integral: Let $I=\int_{0}^{6} \sqrt{10-x}\,dx$ Use substitution: $u=10-x,\; du=-dx$ When $x=0,\; u=10$ When $x=6,\; u=4$ $I=\int_{10}^{4} \sqrt{u}\,(-du)=\int_{4}^{10} u^{1/2}\,du$ $I=\left[\frac{2}{3}u^{3/2}\right]_{4}^{10}$ $I=\frac{2}{3}\left(10^{3/2}-4^{3/2}\right)$ $10^{3/2}=10\sqrt{10}$, $4^{3/2}=8$ $I=\frac{2}{3}(10\sqrt{10}-8)$ Subtract equilibrium expenditure: $p_e x_e = 2 \cdot 6 = 12$ Consumer Surplus: $\text{CS}=\frac{2}{3}(10\sqrt{10}-8)-12$ Simplify: $=\frac{20}{3}\sqrt{10}-\frac{16}{3}-12$ $=\frac{20}{3}\sqrt{10}-\frac{16}{3}-\frac{36}{3}$ $=\frac{20}{3}\sqrt{10}-\frac{52}{3}$ Final Answer: $\displaystyle \text{Consumer Surplus}=\frac{20}{3}\sqrt{10}-\frac{52}{3}$ |