Gain in consumers surplus

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Reference no: EM139311

Q. ABC sweaters are greatly admired by their aficionados. The demand for these sweaters is given by Q = 13 - 0.02 P, where Q is the quantity of sweaters purchased per person per year, and P is the price of a sweater. These sweaters typically sell at the ABC store for $500 per sweater. Explain in a special promotion, Target decides to offer ABC sweaters at a price of $50, while limiting purchases to 2 sweaters per person. Illustrate what is the gain in consumer's surplus for ABC fan that can get these sweaters at Target instead of at the ABC? Draw the appropriate diagram to illustrate this gain, and also do the numerical calculation.

Reference no: EM139311

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