Quadrilateral drawing tool to shade are of producer surplus

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Consider the market for pizza in a small college town with multiple pizzerias. Initially supply and demand are given by S1 and D, such that equilibrium is at E1. A number of pizzerias close, reducing supply. First, use the double drop line drawing tool to label the new equilibrium E2. Due to the price increase some surplus that was going to consumers now goes to the remaining producers. Use the quadrilateral drawing tool to shade this region, labeling it "Transferred". Due to the decline in supply, there is lost consumer and producer surplus that was received prior to the supply decline. Use the triangle drawing tool to shade the area of consumer surplus that was previously earned that is lost. Label it LostCS. Likewise, use the quadrilateral drawing tool to shade the are of producer surplus that was previously earned that is now lost. Label it LostPS.

Reference no: EM131172284

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