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Example Solved Problems with Answer, Solution, Formula - Integration: Consumer’s surplus | 12th Business Maths and Statistics : Chapter 3 : Integral Calculus - II

Chapter: 12th Business Maths and Statistics : Chapter 3 : Integral Calculus - II

Integration: Consumer’s surplus

This theory was developed by the great economist Marshal. The demand function reveals the relationship between the quantities that the people would buy at a given price.

Consumer’s surplus:

This theory was developed by the great economist Marshal. The demand function reveals the relationship between the quantities that the people would buy at a given price. It can be expressed as p = f (x)

Let us assume that the demand of the product x = x0  when the price is p0. But there can be some consumer who is ready to pay q0 which is more than p for the same quantity x0. Any consumer who is ready to pay the price more than p0 gains from the fact that the price is only p0. This gain is called the consumer’s surplus.

It is represented in the following diagram

Mathematically the Consumer’s Surplus (CS) can be defined as


CS = (Area under the demand curve from x = 0 to x = x0 ) – (Area of the rectangle OAPB)



Example 3.27

The demand function of a commodity is y = 36 x2 . Find the consumer’s surplus for y0 = 11

Solution:


 

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12th Business Maths and Statistics : Chapter 3 : Integral Calculus - II : Integration: Consumer’s surplus | Example Solved Problems with Answer, Solution, Formula

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12th Business Maths and Statistics : Chapter 3 : Integral Calculus - II


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