Adam 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 Adam's supply schedule. Graph his supply curve for bottled water. b. If the price of a bottle is $4, how many bottles does Adam's produce and sell? How much producer surplus does Adam's get from these sales? Show Adam's producer surplus in your graph. c. If the price rises $6, how does quantity supplied change? How does Adam's producer surplus change? Show these changes in your graph.
Adam 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 Adam's supply schedule. Graph his supply curve for bottled water. b. If the price of a bottle is $4, how many bottles does Adam's produce and sell? How much producer surplus does Adam's get from these sales? Show Adam's producer surplus in your graph. c. If the price rises $6, how does quantity supplied change? How does Adam's producer surplus change? Show these changes in your graph.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. Adam 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 Adam's supply schedule. Graph his supply curve for bottled water.
b. If the price of a bottle is $4, how many bottles does Adam's produce and sell? How much producer surplus does Adam's get from these sales?
Show Adam's producer surplus in your graph.
c. If the price rises $6, how does quantity supplied change? How does Adam's producer surplus change? Show these changes in your graph.
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