We are given the market information of pizza as below:a)Define the market demand equation and supply equation.b)Estimate the consumers’ surplus, producers' surplus, and total market surplus Supply432.5021Demand246810Quantity (1,000s of slices/day)Price ($/slice)

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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We are given the market information of pizza as below:
a)Define the market demand equation and supply equation.

b)Estimate the consumers’ surplus, producers' surplus, and total market surplus

Supply
4
3
2.50
2
1
Demand
2
4
6
8
10
Quantity (1,000s of slices/day)
Price ($/slice)

Definition Definition Consumer surplus is the consumers' gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price, up to the equilibrium quantity. Producer surplus is the producer's gain from trade. The producer surplus is the area above the supply curve but below the equilibrium price, up to the equilibrium quantity. Consumer surplus is represented by Area A and producer surplus is represented by Area B.

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