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Question: 7 producer surplus for an individual and a market suppose...

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7. Producer surplus for an individual and a market Suppose the market for cheesecake is a perfectly competitive market-that is, sellers take the market price as given. Manuel owns a restaurant where he sells cheesecake. The following graph shows Manuels weekly supply curve, represented by the orange line. Point A represents a point along his supply curve. The price of cheesecake is $3.00 per slice, as shown by the horizontal black line. Manuels Weekly Supply 5.00 4.00 3.50 3.50 3.00 Price 2.50 2.00 Supply 1.50 1.00 0.50 02 46 1012 14 1 8 20 QUANTITY (Silices of cheesecake) From the previous graph, you can tell that Manuel is willing to supply his 4th slice of cheesecake for s per slice, the producer surplus he gains from supplying the 4th slice of cheesecake is s each week. Since he receives $3.00
Suppose the price of cheesecake were to rise to $3.50 per slice. At this higher price, Manuel would receive a producer surplus of S 4th slice of cheesecake he sells. from the The following graph shows the weekly market supply of cheesecake in a small economy. symbol) to shade the area representing producer surplus (PS) when the price (P) of cheesecake is $3.00 per slice. Then, use the green point (triangle symbol) to shade the area representing additional producer surplus when the price rises to $3.50 per slice. Small Economys Weekly Supply 5.00 r 4.50 4.00 Initial PS (P-$3.00) P-$3.50 3.50 3.00 P $3.00 Additional PS (P $3.50) 2.50 00Supply 150 100+ 0.60 0 20 40 0 80 100 120 140 100 180 200 QUANTITY (Thousands of slices of cheesecake)
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