rnie 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: Bottle of water Cost Cost of 1st bottle $1 Cost of 2nd bottle $3 Cost of 3rd bottle $5 Cost of 4th bottle $7 1.From this information, derive Ernie’s supply schedule. 2.Graph his supply curve for bottled water. 3.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? Graph his supply curve for bottled water.
rnie 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: Bottle of water Cost Cost of 1st bottle $1 Cost of 2nd bottle $3 Cost of 3rd bottle $5 Cost of 4th bottle $7 1.From this information, derive Ernie’s supply schedule. 2.Graph his supply curve for bottled water. 3.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? Graph his supply curve for bottled water.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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:
Bottle of water | Cost |
Cost of 1st bottle | $1 |
Cost of 2nd bottle | $3 |
Cost of 3rd bottle | $5 |
Cost of 4th bottle | $7 |
1.From this information, derive Ernie’s supply schedule.
2.Graph his supply curve for bottled water.
3.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? Graph his supply curve for bottled water.
4.If the price rises to $6, how does quantity supplied change? How does Ernie’s producer surplus change? Show these changes in your graph.
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