Answer
Deadweight loss = 98
Surplus = 14
Work Step by Step
Deadweight loss = 0.5 $\times$ (59-31) $\times$ (27-20)
= 98
Forming the demand curve equation, (same as question 4b)
Gradient of demand curve: $\frac{85−45}{0−20}$ = -2
Equation of curve: P- 45 = -2 (Q-20)
P- 45 = -2Q + 40
P = -2Q + 85
Forming the supply curve equation, (same as question 4b)
Gradient of supply curve: $\frac{$5−45}{0−20}$ = 2
Equation of curve: P- 45 = 2 (Q-20)
P - 45 = 2Q - 40
P = 2Q + 5
At price = 59, the quantity demanded would be
59 = -2Q + 85
2Q = 26
Q = 13
Therefore since surplus is the difference between the quantity supplied, and the quantity demanded,
Surplus = 27 - 13
= 14
