8. Consumer and Producer Surplus Suppose Jacques is the only seller in the market for bottled water and Darnell is the only buyer. The following lists show the value Darnell places on a bottle of water and the cost Jacques incurs to produce each bottle of water: Darnell's Value Jacques's Costs Value of first bottle: $10 Cost of first bottle: $1 Value of second bottle: $7 Cost of second bottle: $3 Value of third bottle: $3 Cost of third bottle: $7 Value of fourth bottle: $1 Cost of fourth bottle: $10 The following table shows their respective supply and demand schedules: Price Quantity Demanded Quantity Supplied $1 or less $1 to $3 $3 to $7 4 3 1 2 2 $7 to $10 3 More than $10 4 Use Jacques's supply schedule and Darnell's demand schedule to find the quantity supplied and quantity demanded at prices of $2, $6, and $9. Enter these values in the following table. Price Quantity Demanded Quantity Supplied 2 3 6 3 A price of brings supply and demand into equilibrium. At the equilibrium price, consumer surplus is producer surplus is and total surplus is If Jacques produced and Darnell consumed one less bottle of water, total surplus would If instead, Jacques produced and Darnell consumed one additional bottle of water, total surplus would
8. Consumer and Producer Surplus Suppose Jacques is the only seller in the market for bottled water and Darnell is the only buyer. The following lists show the value Darnell places on a bottle of water and the cost Jacques incurs to produce each bottle of water: Darnell's Value Jacques's Costs Value of first bottle: $10 Cost of first bottle: $1 Value of second bottle: $7 Cost of second bottle: $3 Value of third bottle: $3 Cost of third bottle: $7 Value of fourth bottle: $1 Cost of fourth bottle: $10 The following table shows their respective supply and demand schedules: Price Quantity Demanded Quantity Supplied $1 or less $1 to $3 $3 to $7 4 3 1 2 2 $7 to $10 3 More than $10 4 Use Jacques's supply schedule and Darnell's demand schedule to find the quantity supplied and quantity demanded at prices of $2, $6, and $9. Enter these values in the following table. Price Quantity Demanded Quantity Supplied 2 3 6 3 A price of brings supply and demand into equilibrium. At the equilibrium price, consumer surplus is producer surplus is and total surplus is If Jacques produced and Darnell consumed one less bottle of water, total surplus would If instead, Jacques produced and Darnell consumed one additional bottle of water, total surplus would
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:8. Consumer and Producer Surplus
Suppose Jacques is the only seller in the market for bottled water and Darnell is the only buyer. The following lists show the value Darnell places on a
bottle of water and the cost Jacques incurs to produce each bottle of water:
Darnell's Value
Jacques's Costs
Value of first bottle:
$10
Cost of first bottle:
$1
Value of second bottle: $7
Cost of second bottle: $3
Value of third bottle: $3
Cost of third bottle:
$7
Value of fourth bottle: $1
Cost of fourth bottle: $10
The following table shows their respective supply and demand schedules:
Price
Quantity Demanded
Quantity Supplied
$1 or less
$1 to $3
$3 to $7
$7 to $10
4
3
1
2
2
1
3
More than $10
4
Use Jacques's supply schedule and Darnell's demand schedule to find the quantity supplied and quantity demanded at prices of $2, $6, and $9. Enter
these values in the following table.
Price
Quantity Demanded
Quantity Supplied
2
1
3
6
2
2
3
1
A price of - brings supply and demand into equilibrium.
At the equilibrium price, consumer surplus is S
producer surplus is
|, and total surplus is S
If Jacques produced and Darnell consumed one less bottle of water, total surplus would
If instead, Jacques produced and Darnell consumed one additional bottle of water, total surplus would
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