Suppose That a Consumer's Demand Curve for a Good Can $P = 50 - 4 Q ^ { d }$

question 86

Multiple Choice

Suppose that a consumer's demand curve for a good can be expressed as $P = 50 - 4 Q ^ { d }$ . Suppose that the market is initially in equilibrium at a price of $10. Now suppose that the price rises to $14. What is the change in consumer surplus?

• A)An increase of 38
• B)A decrease of 38
• C)A decrease of 42
• D)A decrease of 36

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Definitions:

Present Value Factors

Multipliers used in calculating the present value of a future amount of money or stream of cash flows given a specified rate of return or discount rate.

Floating-rate Debt

Debt instruments, such as bonds or loans, that have variable interest rates that adjust over the tenure of the obligation.

Market Interest Rate

The prevailing rate at which interest is offered on deposits or loans in the financial markets for a particular term and risk profile.

Effective Interest Rate

An adjusted interest rate that accurately reflects the cost of borrowing including fees and compounding.