1. (5 points)Production. Beyonc uses equipment that she rents for $100 and ingredients that cost $8.35 a serving for the first 7 servings; for additional servings, she gets a discount and additional ingredients cost $7.99. (She does not get any discount on the first six servings!) (Note that she signed a lease and pays the rent regardless of how many dinners she serves; note that regardless of how much ingredients she buys for additional servings, she pays $8.35 for the ingredients for the first 7.) She hires workers at $20 each and finds that they produce servings according to the following schedule:

Dinners	Total Workers
1	0.20
2	0.43
3	0.69
4	1.00
5	1.35
6	1.75
7	2.21
8	2.75
9	3.36
10	4.06
11	4.87
12	5.80
13	6.87
14	8.10

1. (5 points)Perfect competition and equilibrium.
   1. (1 point) Put the demand and supply curves together (at the original productivity and wages). Beyonc is a musician and never took Economics so she naively assumes that she is in a perfectly competitive market. How many servings will she sell? At what price?
   2. (2 points) Draw the graph again and shade in the entire area of consumer surplus. Shade in the entire area of producer surplus.

1. (2 points) Calculate consumer surplus as the sum of the difference between the marginal utility and the price for each serving up to the last sold. Calculate producer surplus as the sum of the difference between price and marginal cost for each serving. What is the dollar value of consumer surplus? What is the dollar value of the producer surplus? What is the dollar value of the total social surplus?