Market Supply and Demand for Pepperoni Pizza
Table 7-5

-Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Take this into account and suppose the price is $8,with only 4 pizzas being bought and sold.Total surplus amounts to

Question

Market Supply and Demand for Pepperoni Pizza
Table 7-5
 
-Refer to Table 7-5.As the table suggests,the demand curve is a straight line and so is the supply curve.Take this into account and suppose the price is $8,with only 4 pizzas being bought and sold.Total surplus amounts to

Quizplus · Accepted Answer

At a price of $8, the quantity demanded is 6 pizzas and the quantity supplied is 14 pizzas. Therefore, there is a surplus of 8 pizzas. 
Consumer surplus is calculated as the area below the demand curve and above the price, which is $(10-8)(6-4)/2 = $2. 
Producer surplus is calculated as the area above the supply curve and below the price, which is $(8-4)(8-4)/2 = $8. 
Total surplus is the sum of consumer surplus and producer surplus, which is $2 + $8 = $10. 
However, since there are 8 unsold pizzas, the total surplus is reduced by the deadweight loss of these unsold pizzas, which is (8/2)(8-6) = $8. 
Therefore, the total surplus at a price of $8 with only 4 pizzas being bought and sold is $10 - $8 = $2. However, the question asks for total surplus for all units sold at this price, which would be (4 x $8) - $2 = $30.