The following graph shows Alyssa's weekly demand for apple pie, represented by the blue line. Point A represents a point along her weekly demandcurve. The market price of apple pie is $1.25 per slice, as shown by the horizontal black line.Alyssa's Weekly Demand2.50Demand2.252.001.751.50Price1.251.000.750.500.250.+0.246.8.1012141618QUANTITY (Slices of apple pie)From the previous graph, you can tell that Alyssa is willing to pay $for her 8th slice of apple pie each week. Because she has to pay only$1.25 per slice, the consumer surplus she gains from the 8th slice of apple pie is $PRICE (Dollars per slice)20 Suppose the price of apple pie were to fall to $1.00 per slice. At this lower price, Alyssa would receive a consumer surplus of $from the 8thslice of apple pie she buys.The following graph shows the weekly market demand for apple pie in a small economy.Use the purple point (diamond symbol) to shade the area representing consumer surplus when the price (P) of apple pie is $1.25 per slice. Then, usethe green point (triangle symbol) to shade the area representing additional consumer surplus when the price falls to $1.00 per slice.Small Economy's Weekly Demand2.50Demand2.25Initial Consumer Surplus (P = $1.25)2.001.751.50Additional Consumer Surplus (P = $1.00)P = $1.251.251.00P = $1.000.750.500.2520406080100120140160180200QUANTITY (Thousands of slices of apple pie)PRICE (Dollars per slice)

When a customer purchases a good for less money than they would typically be prepared to pay, this…

From the previous graph, you can tell that Alyssa is willing to pay $ for her 8th slice of apple pie each week. Because she has to pay only $1.25 per slice, the consumer surplus she gains from the 8th slice of apple pie is $

From the previous graph, you can tell that Alyssa is willing to pay $ for her 8th slice of apple pie each week. Because she has to pay only $1.25 per slice, the consumer surplus she gains from the 8th slice of apple pie is $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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