Using the demand and supply conditions given in Technical Problem 1, answer the following questions concerning consumer, producer, and social surplus in the New York City bagel market.a. For the 8,000th bagel sold each day in NYC, compute the consumer surplus, producer surplus, and social surplus when the price of a bagel is $1.60.b. Compute total consumer, producer, and social surplus when 8,000 bagels per day are produced and consumed at a market price of $1.60.c. At the equilibrium price and quantity, compute social surplus. Is your computed value for social surplus in competitive equilibrium higher or lower than your computed value for social surplus at 8,000 bagels per day in part c? Is this what you expected? Explain.

Data From Problem 1

The market for bagels in New York City is perfectly competitive. In New York City, the daily demand for bagels is Q_d - 20,000 - 5,000P, which is graphed as D in the figure below. The industry supply of bagels in NYC is Q_s = -4,000 + 10,000P, which is graphed as S in the figure.

4.00 3.00 2.40 S 2.00 1.80 1.20 1.00 D 5,000 10,000 15,000 20,000 Quantity of bagels (per day) Price of bagels (dollars)