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.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 15PAE
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Transcribed Image Text: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.
PRICE (Dollars per slice)
7.50
6.75
6.00 +
5.25 Demand
4.50 +
3.75
3.00
2.25 +
1.50 +
0.75 +
0
0
Price
2
Becky's Weekly Demand
P
4 6 8 10 12 14
QUANTITY (Slices of cheesecake)
16
18
20
?
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 $
Suppose the price of cheesecake were to fall to $2.25 per slice. At this lower price, Becky would receive a consumer surplus of S
8th slice of cheesecake she buys.
from the
Transcribed Image Text: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 S
Suppose the price of cheesecake were to fall to $2.25 per slice. At this lower price, Becky would receive a consumer surplus of S
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.
?
PRICE (Dollars per slice)
7.50
6.75
6.00
5.25
4.50
3.75
3.00
2.25
1.50 +
0.75 +
0
0
Demand
P = $3.00
P = $2.25
Small Economy's Weekly Demand
20 40 60 80 100 120 140 160 180
QUANTITY (Thousands of slices of cheesecake)
200
Initial Consumer Surplus (P = $3.00)
from the
Additional Consumer Surplus (P = $2.25)
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