Check Your Understanding

1. Question

   Consider the market for cheese-stuffed jalapeño peppers. There are two consumers, Casey and Josey, and their willingness to pay for each pepper is given in the accompanying table. (Neither is willing to consume more than 4 peppers at any price.) Use the table (i) to construct the demand schedule for peppers for prices of $0.00, $0.10, and so on, up to $0.90, and (ii) to calculate the total consumer surplus when the price of a pepper is $0.40.

   Quantity of peppers	Casey’s willingness to pay	Josey’s willingness to pay
   1st pepper	$0.90	$0.80
   2nd pepper	0.70	0.60
   3rd pepper	0.50	0.40
   4th pepper	0.30	0.30

2. Question

   Again consider the market for cheese-stuffed jalapeño peppers. There are two producers, Cara and Jamie, and their costs of producing each pepper are given in the accompanying table. (Neither is willing to produce more than 4 peppers at any price.) Use the table (i) to construct the supply schedule for peppers for prices of $0.00, $0.10, and so on, up to $0.90, and (ii) to calculate the total producer surplus when the price of a pepper is $0.70.

   Quantity of peppers	Cara’s cost	Jamie’s cost
   1st pepper	$0.10	$0.30
   2nd pepper	0.10	0.50
   3rd pepper	0.40	0.70
   4th pepper	0.60	0.90