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frez [133]
2 years ago
9

Suppose that Michelle buys a cappuccino from Paul's Cafe and Bakery for $4.75. Michelle was willing to pay up to $6.75 for the c

appuccino and Paul's Cafe and Bakery was willing to accept S1.25 for the cappuccino. Based on this information, answer the questions below.
Michelle's consumer surplus is equal to: _______
Paul's Bakery's producer surplus is equal to:__________
Business
1 answer:
miv72 [106K]2 years ago
7 0

Answer:

$2

$3.50

Explanation:

Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.

Consumer surplus = willingness to pay – price of the good

$6.75 - $4.75 = $2

Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product

Producer surplus = price – least price the seller is willing to accept

$4.75 - $1.25 = $3.5

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