Solution Found!
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 Ernie's supply schedule. Graph his supply curve for bottled water. b. If the price of a bottle of water is $4, how many bottles does Ernie produce and sell? How much producer surplus does Ernie get from these sales? Show Ernie's producer sur-plus in your graph. c. If the price rises to $6, how does quantity supplied change? How does Ernie's producer surplus change? Show these changes in your graph.
Chapter 7, Problem 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 Ernie's supply schedule. Graph his supply curve for bottled water.
b. If the price of a bottle of water is $4, how many bottles does Ernie produce and sell?How much producer surplus does Ernie get from these sales? Show Ernie's producer sur-plus in your graph.
c. If the price rises to $6, how does quantity supplied change? How does Ernie's producer surplus change? Show these changes in your graph.
Questions & Answers
QUESTION:
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 Ernie's supply schedule. Graph his supply curve for bottled water.
b. If the price of a bottle of water is $4, how many bottles does Ernie produce and sell?How much producer surplus does Ernie get from these sales? Show Ernie's producer sur-plus in your graph.
c. If the price rises to $6, how does quantity supplied change? How does Ernie's producer surplus change? Show these changes in your graph.
ANSWER:Step 1 of 4
Given data:
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 the first bottle - $1
Cost of the second bottle - $3
Cost of the third bottle - $5
Cost of the fourth bottle - $7