How Excess Supply Creates an Opportunity for a Surplus-Enhancing Transaction 2.50 .If P= s2 then Qn =2,000 2.00 gallons/day 31.75 . Additionaloutput costs only $1 s This is $1 less than a buyer would 1.50 pay if the buyer pays the seller $1.75, the buyer gains an economic 1.00 surplus of $0. 25 then the seller gains an economic surplus of 075 5 Quantity(1,000s of gallons/day) Chapter 7: Efficiency and Exchange Slide 10MB MC Chapter 7: Efficiency and Exchange Slide 10 How Excess Supply Creates an Opportunity for a Surplus-Enhancing Transaction Quantity (1,000s of gallons/day) Price ($/gallon) D S 1 2 3 4 5 2.50 2.00 1.50 1.00 .50 1.75 •If P = $2 then QD = 2,000 gallons/day •Additional output costs only $1 •This is $1 less than a buyer would pay •If the buyer pays the seller $1.75, the buyer gains an economic surplus of $0.25 then the seller gains an economic surplus of $0.75