Final answer:
Consumer surplus is shaded above the equilibrium price and below the demand curve, while producer surplus is shaded below the equilibrium price and above the supply curve. The shading demonstrates the benefits and changes in welfare for both consumers and producers in various market scenarios.
Step-by-step explanation:
In the context of the market supply and demand model, the area representing Berkeley's consumer surplus is the region above the market equilibrium price and below the demand curve. Typically, this is a triangular area on a graph if the demand curve is linear. It is signified by a higher willingness to pay from the consumers compared to the actual price in the market, thus representing the additional value or net benefit consumers receive from purchasing the product at the market price.
For Nick's total wage revenue, which is analogous to producer surplus in this context, the area is below the equilibrium price and above the supply curve. This surplus represents the difference between what producers (or, in this case, workers like Nick) are willing to accept as payment and what they actually receive. On a supply and demand graph, this is also shown as a triangular area.
When carrying out these steps on a supply and demand graph, you would use a green triangle symbol to shade in the consumer surplus area labeled F, and a purple diamond symbol to shade in the producer surplus area labeled G. The exercise demonstrates shifts in surplus as market conditions change, such as the imposition of trade barriers leading to an increase in producer surplus while consumer surplus decreases.