image
Figure 3.4 Valuing LASIK Eye Surgery
The demand curve for LASIK is shown by the equation Q = 2,400,000 – 750P. The shaded triangle represents the consumer surplus in the LASIK market. We can use the actual price ($2,100), the choke price ($3,200), and the equilibrium quantity sold (825,000) to calculate the triangle’s height (demand choke price –actual price) and base (quantity sold). The equation for the total consumer surplus thus becomes image (quantity sold) × (demand choke price – actual price), yielding a consumer surplus of approximately $454 million.