Below is the market for funnel cakes at a small community fair.

a) what is the equilibrium price and quantity of the funnel cakes?

b) What is the total consumer spending on funnel cakes at the equilibrium point?

c) Calculate the producer surplus and consumer surplus at equilibrium. Show your work.

d) What would be the result if the suppliers charged $6? Explain.

e) Cheese pretzels are substitute good for funnel cakes at the same fair. Draw a correctly labeled graph of the market for cheese pretzels. Shade the area of consumer surplus.

f) A large number of new guests enter the fair. Illustrate the effect of this change on the same graph from part E.

g) does the consumer surplus increase, decrease, or stay the same as a result of the change from part F? Explain.

h) A new cheese pretzel stand opens at the same fair. On a new graph, illustrate the market for cheese pretzels at this fair before and after the new stand opened.

i) if the large number of new guests entering the fair happened at the same time that the new cheese pretzel stand open how would the equilibrium price and quantity for cheese pretzels change? Explain.

Question

sammi0825 sammi0825

25-07-2022
Advanced Placement (AP)

contestada

Below is the market for funnel cakes at a small community fair.

a) what is the equilibrium price and quantity of the funnel cakes?

b) What is the total consumer spending on funnel cakes at the equilibrium point?

c) Calculate the producer surplus and consumer surplus at equilibrium. Show your work.

d) What would be the result if the suppliers charged $6? Explain.

e) Cheese pretzels are substitute good for funnel cakes at the same fair. Draw a correctly labeled graph of the market for cheese pretzels. Shade the area of consumer surplus.

f) A large number of new guests enter the fair. Illustrate the effect of this change on the same graph from part E.

g) does the consumer surplus increase, decrease, or stay the same as a result of the change from part F? Explain.

h) A new cheese pretzel stand opens at the same fair. On a new graph, illustrate the market for cheese pretzels at this fair before and after the new stand opened.

i) if the large number of new guests entering the fair happened at the same time that the new cheese pretzel stand open how would the equilibrium price and quantity for cheese pretzels change? Explain.

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azikennamdi azikennamdi · Answer 1 · 2022-07-27T22:31:19+02:00

The equilibrium price and quantity for the funnel cakes are:

EP = 6

EQ = 5

Note that Equilibrium price and quantity is the price and quantity where the demand and supply curve intersect.

What is the total consumer spending on funnel cakes at the equilibrium point?

Total consumer spending is given by

Price x Quantity

= 30 Units

What is the producer surplus and consumer surplus at equilibrium. Show your work?

The producer surplus is given by the yellow right angled triangle in the attached image. To get the producer surplus, we need to find the area of that triangle.

The Area of the triangle is given as;

1/2 b *h

= 1/2 *3 *6

= 9

Since the consumer surplus is the same dimension, hence, it is also given as

= 9

What would be the result if the suppliers charged $6?

If the suppliers charged $6, there will be a cut back in the amount of units demanded to 4 units. The law of supply indicates that price and quantity are inversely proportional, all things being equal.

What effect will a large number of guests have on the graph?

Large number of guests = increased demand.

Increased demand = increased price.

This is given by the law of demand. Which indicates that price and quantity are inversely proportional, all things being equal.

Does the consumer surplus increase, decrease, or stay the same as a result of the change from part F?

No, there will be a shift to the right of the the demand curve, Please see the attached image.

If the large number of new guests entering the fair happened at the same time that the new cheese pretzel stand open how would the equilibrium price and quantity for cheese pretzels change?

In this case, there would be a new equilibrium point given that Demand and Supply have both shifted right ward. See attached graph.

Learn more about equilibrium price and quantity at;

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