Homework(Ch 07)The following graph shows Kyoko'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.?Kyoko's Weekly Demand7.506.75 +6.005.25 Demand4.503.75Price3.002.25 +1.50 +0.75 +0046 8 10 12 1416 18QUANTITY (Slices of cheesecake)F3F469°FannyF1PRICE (Dollars per slice)F220-0+F520COLF6F74-F8J+F9F10-O:F11F12FnLockX9:49 A6/3/20InsertPrt Sc "FmnyFrom the previous graph, you can tell that Kyoko 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 $from theSuppose the price of cheesecake were to fall to $2.25 per slice. At this lower price, Kyoko would receive a consumer surplus of $8th 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.Small Economy's Weekly Demand7.50◇6.75Initial Consumer Surplus (P = $3.00)6.00A5.254.50Additional Consumer Surplus (P = $2.25)3.75ollars per slice)Demand

Consumer surplus = Willingness to pay - Price that the consumer actually pays

for her 8th slice of cheesecake each week. Because she has to pay only from the From the previous graph, you can tell that Kyoko is willing to pay $ $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, Kyoko would receive a consumer surplus of $ 8th slice of cheesecake she buys.

for her 8th slice of cheesecake each week. Because she has to pay only from the From the previous graph, you can tell that Kyoko is willing to pay $ $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, Kyoko would receive a consumer surplus of $ 8th slice of cheesecake she buys.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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