Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The following graph shows the weekly market demand for cheesecake In a small economy.
Use the purple polnt (diamond symbol) to shade the area representing consumer surplus when the price (P) of cheesecake is $3.00 per slice. Then,
use the green polnt (triangle symbol) to shade the area representing additional consumer surplus when the price fals to $2.25 per slice.
Small Economy's Wookly Damand
7.50
6.75
Iniial Consumar Surplus (P= $3.00)
6.00
5.25
Damand
4.50
Additional Cansumer Surplus (P= $2.25)
3.75
P= $3.00
3.00
2.25
P= 12.25
150
0.75
20
40
60
80
100 120 140
160 180 200
QUANTITY (Thousands of slices of choasacaka)
PRICE (Dallars par slice)

Transcribed Image Text:1. Consumer surplus for an individual and a market
The following graph shows Musashi's weekly demand for cheesecake, represented by the blue line. Polnt A represents a polnt along his weekly
demand curve. The market price of cheesecake Is $3.00 per slice, as shown by the horizontal black line.
Musashi's Wookly Damand
7.50
6.75
6.00
5.25
Damand
4.50 +
3.75
Prica
3.00
2.25
1.50
0.75
2
4
10
12
14
16
18
20
QUANTITY (Slicas of choasocaka)
From the prevlous graph, you can tell that Musashi is willing to pay $
$3.00 per slice, the consumer surplus he galns from the sth slice of cheesecake is $
for his 8th slice of cheesecake each week. Because he has to pay only
Suppose the price of cheesecake were to fall to $2.25 per slice. At this lower price, Musashi would recelve a consumer surplus of $
from the
sth slice of cheesecake he buys.
PRICE (Dallars par slice)
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