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I know that the equilibrium is 8 and that is where the total surplus is maximized, however, I don't understand how to get the amount for consumer surplus and producer surplus when they maximize. How would I go about doing so?

I know that the equilibrium is 8 and that is where the total surplus is maximized, however, I don't understand how to get the amount for consumer surplus and producer surplus when they maximize. How would I go about doing so?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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I know that the equilibrium is 8 and that is where the total surplus is maximized, however, I don't understand how to get the amount for consumer surplus and producer surplus when they maximize. How would I go about doing so?

 

The graph titled "Pizza Market" illustrates the relationship between the price of pizza (on the vertical axis) and the quantity of pizza (on the horizontal axis). - The vertical axis represents the price, ranging from 0 to 16. - The horizontal axis represents the quantity, ranging from 0 to 300. There are two intersecting lines on the graph: 1. **Supply Curve (S1)**: - This line is drawn in orange and slopes upward from left to right. - It begins at a price of 0 with a quantity of 0 and increases to a price of 16 with a quantity of 300. - An upward slope indicates a direct relationship between price and quantity supplied. As prices rise, suppliers are willing to supply more pizza. 2. **Demand Curve (D1)**: - This line is drawn in blue and slopes downward from left to right. - It starts at a price of 16 with a quantity of 0 and decreases to a price of 0 with a quantity of 300. - A downward slope indicates an inverse relationship between price and quantity demanded. As prices fall, consumers are more willing to purchase greater quantities of pizza. **Equilibrium Point**: - The two lines intersect at the point of equilibrium, where the quantity demanded equals the quantity supplied. This represents the optimal price and quantity in the market. At this point, neither surplus nor shortage occurs. This graph is a standard representation in economics to study supply and demand dynamics within a market.
Transcribed Image Text:The graph titled "Pizza Market" illustrates the relationship between the price of pizza (on the vertical axis) and the quantity of pizza (on the horizontal axis). - The vertical axis represents the price, ranging from 0 to 16. - The horizontal axis represents the quantity, ranging from 0 to 300. There are two intersecting lines on the graph: 1. **Supply Curve (S1)**: - This line is drawn in orange and slopes upward from left to right. - It begins at a price of 0 with a quantity of 0 and increases to a price of 16 with a quantity of 300. - An upward slope indicates a direct relationship between price and quantity supplied. As prices rise, suppliers are willing to supply more pizza. 2. **Demand Curve (D1)**: - This line is drawn in blue and slopes downward from left to right. - It starts at a price of 16 with a quantity of 0 and decreases to a price of 0 with a quantity of 300. - A downward slope indicates an inverse relationship between price and quantity demanded. As prices fall, consumers are more willing to purchase greater quantities of pizza. **Equilibrium Point**: - The two lines intersect at the point of equilibrium, where the quantity demanded equals the quantity supplied. This represents the optimal price and quantity in the market. At this point, neither surplus nor shortage occurs. This graph is a standard representation in economics to study supply and demand dynamics within a market.
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