5. Jules wants to purchase a Royale with cheese from Vincent. Vincent is willing to offer this tasty burger for $3. The most Jules is willing to pay for the tasty burger is $8 (after all, his girlfriend is a vegetarian, so he doesn’t get many opportunities for tasty burgers).
a. How large are the potential gains from trade if Jules and Vincent agree to make this trade? In other words, what is the sum of producer and consumer surplus if the trade happens?
b. If the trade takes place at $4, how much producer surplus goes to Vincent? How much consumer surplus goes to Jules?
c. If the trade takes place at $7, how much producer surplus goes to Vincent? How much consumer surplus goes to Jules?