Suppose that the equation for a demand curve is: P = 15 – 0.5Q .
a. Draw the demand curve
b. How much of this product could be given away?
c. What is the total consumer surplus at a price of $5?
d. If price increases to $7, will total expenditure increase or decrease? What does this tell us about price elasticity?
e. Determine the loss in total consumer surplus when price increases from $5 to $7.