(a) To find total consumer spending at the equilibrium point, you’ll need to multiply the equilibrium price by the equilibrium quantity. It’s the point where the supply and demand curves intersect.
(b) Producer surplus is the area between the supply curve and the price, up to the equilibrium quantity. Consumer surplus is the area between the demand curve and the price, down to the equilibrium quantity. Calculate these areas using the equilibrium price and quantity.
(c) If suppliers charged $6, the price would be above the equilibrium price. This would likely result in a surplus of funnel cakes, as quantity supplied would exceed quantity demanded.
(d) Draw a market for cheese pretzels with price and quantity on the axes. Shade the area of consumer surplus, which is the area between the demand curve and the price, down to the equilibrium quantity.
(e) If a large number of new guests enter the fair, the demand for cheese pretzels could increase. You can illustrate this by shifting the demand curve to the right, showing an increase in quantity demanded at the same price.
(f) Consumer surplus may increase if the influx of new guests increases demand for cheese pretzels, leading to higher quantities consumed at the same price.
(g) To illustrate the market for cheese pretzels before and after a new stand opens, you’ll need two separate graphs. The first one shows the market before the new stand, and the second one shows the market after the new stand. You should see an increase in the supply curve after the new stand opens.
(h) If the large number of new guests and the new cheese pretzel stand opening happen simultaneously, the equilibrium price could either increase, decrease, or remain indeterminate, depending on the magnitude of the shifts in supply and demand. You would need to create two different graphs, one showing a rightward shift in demand, and another showing an increase in supply, to illustrate this. The final price and quantity would depend on the relative size of these shifts.
For each of these steps, you can calculate values based on the information provided or assumptions you make, and use these values to explain the economic concepts involved.