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Homework answers / question archive / Consumer and Producer Surplus Suppose Brian is the only seller in the market for bottled water and Tim is the only buyer
Consumer and Producer Surplus
Suppose Brian is the only seller in the market for bottled water and Tim is the only buyer. The following lists show the value Tim places on a bottle of water and the cost Brian incurs to produce each bottle of water:
Tim's Value Value of first bottle: $10 Value of second bottle: $7 Value of third bottle: $3 Value of fourth bottle: $1
Brian's Costs Cost of first bottle: $1 Cost of second bottle: $3 Cost of third bottle: $7 Cost of fourth bottle: $10
The following table shows their respective supply and demand schedules:
Price Quantity Demanded Quantity Supplied
$1 or less
4 0
$1 to $3
3 1
$3 to $7
2 2
$7 to $10
1 3
More than $10
0 4
Use Brian's supply schedule and Tim's demand schedule to find the quantity supplied and quantity demanded at prices of $2, $6, and s9. Enter these values in the following table.
Price 2 6 9
Quantity Demanded Quantity Supplied
A price of ? brings supply and demand into equilibrium.
At the equilibrium price, consumer surplus is
s
, producer surplus is IS I, and total surplus is
If Brian produced and Tim consumed one less bottle of water, total surplus would ? .
If instead, Brian produced and Tim consumed one additional bottle of water, total surplus would ? .
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