Question

2. Consumer surplus for an individual and a market The following graph shows Jacques's weekly demand for cheesecake, represented by the blue line. Point A represents a point along his weekly demand curve. The market price of cheesecake is $1.25 per slice, as shown by the horizontal black line. Jacques's Weekly Demand 2.50 Demand 2.25 2.00 1 75 1.50 Price 1 25 1,00 0.75 0.50 0 25 0 2468 101214 16 18 20 QUANTITY (Slices of cheesecake) for his 8th slice of cheesecake each week. Because he has to pay only From the previous graph, you can tell that Jacques is willing to pay s $1.25 per slice, the consumer surplus he gains from the 8th slice of cheesecake is s Suppose the price of cheesecake were to fall to $1.00 per slice. At this lower price, Jacques would receive a consumer surplus or s 8th slice of cheesecake he buys from the

Answer 1

1. 1.50

2. Consumer surplus 1.50-1.25=0.25

3. Consumer surplus 1.50-1= 0.50

4. First Consumer surplus will be the triangle above 1.25 price, when the price is $1, consumer surplus is the lower triangle comprising $1 price .