Question: A local restaurant, Getfat, supposedly sells the best cheese steakfries in town. A single consumer's demand function for their steakfries is QD = 8 - .5p, and the supply function for a single consumer is QS = p - 1.
a. What is the equilibrium price and quantity for a single consumer?
b. What is the consumer surplus and producer surplus?
Part 2: The owner of Getfat decides to offer an "all you can eat" special for $20. Assuming the single consumer demand curve is still QD = 8 - .5p,
a. how many steakfries will the consumer now eat?
b. how much consumer surplus will the consumer now receive?
c. How high could the owner of Getfat raise the "all you can eat" price and still have that consumer eat steakfries at Getfat?