Use the following to answer questions 6-8. Table: Coffee Shops Cups of Coffee (hundreds per day) The Buzz Costs Jo' Mama Costs $0.25 $0.75 0.50 1.00 0.75 1.50 1.00 2.00 1.50 2.50 3.00 3.50 Trembles Costs $0.90 1.50 1.90 2.50 2.90 2.00 3.50 2.50 3.90 6. Table: Coffee Shops) Look at the table Coffee Shops. If the price of coffee is $1.75, show how total producer surplus decreases at any number of cups that differs from the equilibrium number found in the previous question.
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The first column shows the number of donuts consumed, while the second and third columns (respectively) show Shane's and Miriam's marginal personal use values. Assume that Shane's initial endowment is three donuts, while Miriam's initial endowment is 13 donuts. Suppose that Miriam is allowed to set the price at which Shane can purchase additional donuts (beyond his initial endowment of three donuts). What price would Miriam set if her objective were:
To maximize her Total Revenues (that is, the number of donuts Shane purchases multiplied by the price set by Miriam);
To maximize Miriam's Producer Surplus (that is, Total Revenues minus Miriam's Total Costs, defined as her cumulative opportunity cost of selling donuts to Shane rather than consuming them herself);
To maximize Shane's and Miriam's Total Surplus (that is, Consumer Surplus plus Producer Surplus)
For each case, provide both your answers and a brief explanation of how you derived it
| Number of Donuts | Shane's Marginal Personal Use Value | Miriam's Marginal Personal Use Value | |
| 0 | $0.00 | $0.00 | |
| 1 | $2.00 | $1.50 | |
| 2 | $1.90 | $1.45 | |
| 3 | $1.80 | $1.40 | |
| 4 | $1.70 | $1.35 | |
| 5 | $1.60 | $1.30 | |
| 6 | $1.50 | $1.25 | |
| 7 | $1.40 | $1.20 | |
| 8 | $1.30 | $1.15 | |
| 9 | $1.20 | $1.10 | |
| 10 | $1.10 | $1.05 | |
| 11 | $1.00 | $1.00 | |
| 12 | $0.90 | $0.95 | |
| 13 | $0.80 | $0.90 | |
| 14 | $0.70 | $0.85 | |
| 15 | $0.60 | $0.80 | |
| 16 | $0.50 | $0.75 | |
| 17 | $0.40 | $0.70 | |
| 18 | $0.30 | $0.65 | |
| 19 | $0.20 | $0.60 | |
| 20 | $0.10 | $0.55 | |
| Initial allocations |
