Eric Heiden and Kitty Caruthers have just opened a new skating emporium called the
Zuider Zee. After careful market research they have concluded that the market demand curve
for the rink will be
Q = 20 - (4/5)*P
Their accountant tells them that their supply curve for hours of operation ought to be
Q = -4 + (2/5)*P
1. Use the given supply and demand curves to solve for the equilibrium price and
2. Consumer surplus is the area under the demand curve but above the equilibrium price.
What is consumer surplus for market for skating at the Zuider Zee?
3. The market consists of 10 identical consumers. That is, market demand is the sum of
10 identical demands at any given price. How much would any one of the 10 consumers be
willing to pay in order to become a member of the Zuider Zee?
4. Would any individual's final demand change as a result of the imposition of a
membership fee? Yes No