Question

7. Producer surplus for an individual and a market Suppose the market for cheesecake s a parfectly competitive market-that s,sellars talke the market price as given. Shen owns a restaurant where he sells cheesecake. The follawing graph shows Shan's weddy supply curve, represented by the arange line. Point A represerts a point alang his supply curve. The price of cheesacake is $3.00 per slicn, as shown by the horizontal black lne. 3hen's weakly 3uppty the previcus graph, you can tell that Shen is willing to supply his 8th sice of cheesecake foreach wesk. Snce he roceives $3.00 per slice, the producer surplus he gains from supplying the 8th sice af cheesecake is Suppose the price of deesecake were torse to $3.75 per s ice. At this higher price, Shan woud ro㎝rve a producer surplus of 8th slice of chocesecake he sells from the The follawing graph shows the weckly market supply af cheesecake inasmall economy Use the puple point (damond symboi) to shade the area rapresenting producer supius (PS) when the price (P) af checsecake is $3.00 per sNce Then, use the green point (triangie symboi) to shade the aras raprasenting additional producer surplus when the price rises to $3.75 per sice dtional Ps(P-$375) -53.75 F-$3.00 LIANTITY(Thousiands of sloes cf cheesecasn)

Answer 1