The aggregate demand for good X is Q = 20 minus P, and the market price is P = $8. What is the maximum amount that consumers are willing to pay for the quantity demanded at this price?

so maximum amount that consumers are willing to pay for the quantity demanded at this price = $168

Explanation:

given data

Q = 20 - P

P = $8

to find out

maximum amount that consumers are willing to pay for the quantity demanded at this price

solution

we get here demand at current market price that is

Q = 20 - P

Q = 20 - 8

Q = 12

and Total expenditure incurred will be at at current market price will be

Total expenditure incurred = Price * Quantity ... 1

Total expenditure incurred = $8 * 12

Total expenditure incurred = $96

and

we get price when Q = 0

Q = 20 - P

P = 20

so now consumer surplus will be here as

consumer surplus = 0.5 * (Price when (Q = 0) - Current market price) * Quantity ... 2

put her value we get

consumer surplus = 0.5 * (20 - 8) * 12

consumer surplus = $72

and

now we get maximum amount that is

maximum amount = Current expenditure + Consumer surplus

maximum amount = $96 + $72

maximum amount = $168

so maximum amount that consumers are willing to pay for the quantity demanded at this price = $168