Question

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 Manuel's 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.

From the previous graph, you can tell that Manuel is willing to supply his 8th slice of cheesecake for $_______  each week, Since he receives $3.00 per slice, the producer surplus he gains from supplying the 8th slice of cheesecake is $_______.

Suppose the price of cheesecake were to rise to $3.75 per slice. At this higher price, Manuel would receive a producer surplus of s from the 8th slice of cheesecake he sells.

The following graph shows the weekly market supply of cheesecake in a small economy.

Use the purple point (diamond 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 $3.75 per slice.

Answer 1

Answer:

From the previous graph, you can tell that Manuel is willing to supply his 8th slice of cheesecake for per $2.25 each week. Since he receives $3.00 per slice, the producer surplus he gains from supplying the 8th slice of cheesecake is $ $0.75 ($3 - $2.25)

Suppose the price of cheesecake were to rise to $3.75 per slice. At this higher price, Manuel would receive a producer surplus of $1.50 ($ 3.75 - $ 2.25) from the 8th slice of cheesecake he sells.

Small Economy's Weekly Supply Initial PS (P=$3.00) A Additional Ps (P-53.75) PRICE (Dolars persica) Supply 0 20 40 60 80 100 120 140 160 180 200 QUANTITY (Thousands of slices of cheesecake)

Answer 2

The answers in Answer#1 were mostly correct, but the problem is, in his last question, he marked the graph incorrectly. The purple area he marked should be the green one, and the green one he marked should be the purple one.