Suppose that michelle buys a cappuccino from paul's cafe and bakery for $4.25 . michelle was willing to pay up to $7.75 for the cappuccino and paul's cafe and bakery was willing to accept $0.75 for the cappuccino. based on this information, answer the questions.
(a) michelle's consumer surplus: $
(b) paul's cafe and bakery's producer surplus: $

a. Michelle's consumer surplus: $3.5

b. Paul's Cafe and Bakery producer surplus: $3.5

Explanation:

This one is simple I attached a graphic so you can understand me better:

The consumer surplus is just the difference between the price payed and the price willed to pay by the consumer, in this case the price payed was $4.25 but Michelle was willing to pay up to $7.75 so we just substract this numbers

7.75 - 4.25 = 3.5

Same for the producer surplus which is the difference between the price the consumer pay and the price that the producer was willing to accept.

4.25 - 0.75 = 3.5

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