4. Consumer surplus for an individual and a marketThe following graph shows Becky's weekly demand for cheesecake, represented by the blue line. Point A represents a point along her weekly demandcurve. The market price of cheesecake is $3.00 per slice, as shown by the horizontal black line.PRICE (Dollars per slice)7.506.756.00 +5.25 Demand4.50 +3.753.002.25 +1.50 +0.75 +00Price2Becky's Weekly DemandP4 6 8 10 12 14QUANTITY (Slices of cheesecake)161820?From the previous graph, you can tell that Becky is willing to payfor her 8th slice of cheesecake each week. Because she has to pay only$3.00 per slice, the consumer surplus she gains from the 8th slice of cheesecake is $Suppose the price of cheesecake were to fall to $2.25 per slice. At this lower price, Becky would receive a consumer surplus of S8th slice of cheesecake she buys.from the From the previous graph, you can tell that Becky is willing to pay $for her 8th slice of cheesecake each week. Because she has to pay only$3.00 per slice, the consumer surplus she gains from the 8th slice of cheesecake is SSuppose the price of cheesecake were to fall to $2.25 per slice. At this lower price, Becky would receive a consumer surplus of S8th slice of cheesecake she buys.The following graph shows the weekly market demand for cheesecake in a small economy.Use the purple point (diamond symbol) to shade the area representing consumer surplus when the price (P) of cheesecake is $3.00 per slice. Then,use the green point (triangle symbol) to shade the area representing additional consumer surplus when the price falls to $2.25 per slice.?PRICE (Dollars per slice)7.506.756.005.254.503.753.002.251.50 +0.75 +00DemandP = $3.00P = $2.25Small Economy's Weekly Demand20 40 60 80 100 120 140 160 180QUANTITY (Thousands of slices of cheesecake)200Initial Consumer Surplus (P = $3.00)from theAdditional Consumer Surplus (P = $2.25)

A consumer surplus occurs when customers pay less for a good or service than they would be willing…

4. Consumer surplus for an individual and a market The following graph shows Becky's weekly demand for cheesecake, represented by the blue line. Point A represents a point along her weekly demand curve. The market price of cheesecake is $3.00 per slice, as shown by the horizontal black line.

4. Consumer surplus for an individual and a market The following graph shows Becky's weekly demand for cheesecake, represented by the blue line. Point A represents a point along her weekly demand curve. The market price of cheesecake is $3.00 per slice, as shown by the horizontal black line.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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