Question

What happens to total surplus at equilibrium if the supply curve shifts from p=2q to p=4q while demand is unchanged and given by the equation p = 20 - q?

Answer 1

When the supply curve shifts from p=2q to p=4q while demand is unchanged, the new equilibrium price is $16 and the new equilibrium quantity is 4.

Step-by-step explanation:

In this scenario, the supply curve shifts from p=2q to p=4q while demand remains unchanged at p = 20 - q.

To find out what happens to total surplus at equilibrium, we need to compare the original equilibrium price and quantity with the new equilibrium price and quantity.

At the original equilibrium, the price is $2 and the quantity is 12. For the new equilibrium, we can plug in the new supply equation into the demand equation to get p = 20 - (4q), and set that equal to the new supply equation p = 4q. Solving for q, we find q = 4 and p = 16. Therefore, the new equilibrium price is $16 and the new equilibrium quantity is 4.