CyberEconomics tries to hide the mathematics
that lurks behind much of economics, and instead it
tries to give you the intuition and commonsense of
economic ideas and theories. For those who miss the
mathematics, here is a simple problem just for
you.
Demand curves can be given in the form of an
equation, such as:
Quantity Demanded = 200  2(Price)
which can also be written as:
Price = 100 .5(Quantity Demanded)
This is a straightline demand curve, which is easy
to work with mathematically. Realworld demand curves
are unlikely to ever be so simple.

a) If Price equals 80, what would Quantity Demanded
be?


b) If Quantity Demanded equals 60, what would Price
be? $



Below is a graph showing this demand curve. Suppose
that in this market price is 40 and quantity demanded
is 120 as in the graph. Recall that the formula for
area of a rectangle is height times width, and the
formula for area of a triangle is one half height
times width.

c) What is the consumer surplus?
$


d) What is the revenue going to sellers?
$


e) What is the marginal benefit of the 120th unit?
$


f) What is value in use when 120 are produced?
$


g) What is the value in exchange in this market?
$



(The following questions add a supply curve, and
you might want to read the sections on producer
surplus and how both consumer surplus and producer
surplus appear on a supply and demand graph before you
attempt these questions.)
Suppose that there is a supply curve in this market
that has the equation:
Quantity Supplied = 2Price.

What will equilibrium quantity be?


What will equilibrium price be?
$


At this equilibrium, what will consumer surplus be?
$


At this equilibrium, what will producer surplus be?
$


