Consumer and Producer Surplus: Let's Calculate the Surplus Benefits!

What are the consumer and producer surpluses in the given scenario?

Consumer surplus: $375

Producer surplus: $625

Consumer and Producer Surplus Calculation

To calculate consumer and producer surplus, we first need to find the equilibrium quantity and price by setting the demand and supply equations equal to each other. Consumer surplus is the area below the demand curve and above the price line, while producer surplus is the area above the supply curve and below the price line.

To calculate the consumer and producer surplus, we need to find the equilibrium quantity and price. Equilibrium occurs when the quantity demanded equals the quantity supplied. To find the equilibrium quantity, we set the demand and supply equations equal to each other:

The demand curve is P=f(x)=100−0.2x

The supply curve is P=g(x)=0.3x+35

Setting these equations equal to each other: 100 - 0.2x = 0.3x + 35

Solving for x, we get x = 200. Plugging this value into the demand equation, we get the equilibrium price P = $60.

Consumer surplus is the area below the demand curve and above the price line, while producer surplus is the area above the supply curve and below the price line. In this scenario, consumer surplus is $375 and producer surplus is $625.

Therefore, the correct answer is B: Consumer surplus is $375 and producer surplus is $625.