Ernie owns a water pump. Because pumping large amounts of water is harder than pumping
Chapter 7, Problem Problems and Applications 7.5(choose chapter or problem)
Ernie owns a water pump. Because pumping large amounts of water is harder than pumping small amounts, the cost of producing a bottle of water rises as he pumps more. Here is the cost he incurs to produce each bottle of water: Cost of first bottle $1 Cost of second bottle 3 Cost of third bottle 5 Cost of fourth bottle 7 a. From this information, derive Ernies supply schedule. Graph his supply curve for bottled water. b. If the price of a bottle of water is $4, howmany bottles does Ernie produce and sell?How much producer surplus does Ernie getfrom these sales? Show Ernies producersurplus in your graph.c. If the price rises to $6, how does quantitysupplied change? How does Ernies producer surplus change? Show these changes in yourgraph.
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