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Consider the problem of a rational consumer with an experienced utility function given by 10x√+m. let q denote the market price of good x. question. what is the expression for the consumer surplus if the consumer receives a total cash rebate of qx√ when he buys x units of the good?

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LearnGrow

Consumer Surplus = Total utility - expenditure of consumer;

In our case the market price is q and consumer gets a rebate ( discount ) of q sqrt (x). According this the expenditure is q - q sqrt (x).

The total utility is  given with 10x√+m.

So, the expression for the consumer surplus is: 10x√+m -q - q sqrt (x).