Suppose Carlos is the only seller in the market for bottled water and Van is the only buyer. The following lists show the value Van places on a bottle of water and the cost Carlos incurs to produce each bottle of water: Van's Value Value of first bottle: $9 Value of second bottle: $7 Value of third bottle: $4 Value of fourth bottle: $1 Carlos's Costs Cost of first bottle: $1 Cost of second bottle: $4 Cost of third bottle: $7 Cost of fourth bottle: $9 The following table shows their respective supply and demand schedules: Price Quantity Supplied Quantity Demanded More than $9 4 0 $7 to $9 3 1 $4 to $7 2 2 $1 to $4 1 3 $1 or less 0 4 Use Carlos's supply schedule and Van's demand schedule to find the quantity supplied and quantity demanded at prices of $2, $5, and $8. Enter these values in the following table. Price Quantity Supplied Quantity Demanded 2 5 8 A price of ? brings supply and demand into equilibrium. At the equilibrium price, consumer surplus is $? , producer surplus is $ ? , and total surplus is $ ? . If Carlos produced and Van consumed one less bottle of water, total surplus would ? If instead, Carlos produced and Van consumed one additional bottle of water, total surplus would ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose Carlos is the only seller in the market for bottled water and Van is the only buyer. The following lists show the value Van places on a bottle of water and the cost Carlos incurs to produce each bottle of water:

	Van's Value
Value of first bottle:	$9
Value of second bottle:	$7
Value of third bottle:	$4
Value of fourth bottle:	$1

	Carlos's Costs
Cost of first bottle:	$1
Cost of second bottle:	$4
Cost of third bottle:	$7
Cost of fourth bottle:	$9

The following table shows their respective supply and demand schedules:

Price	Quantity Supplied	Quantity Demanded
More than $9	4	0
$7 to $9	3	1
$4 to $7	2	2
$1 to $4	1	3
$1 or less	0	4

Use Carlos's supply schedule and Van's demand schedule to find the quantity supplied and quantity demanded at prices of $2, $5, and $8. Enter these values in the following table.

Price	Quantity Supplied	Quantity Demanded
2
5
8

A price of ? brings supply and demand into equilibrium.

At the equilibrium price, consumer surplus is $? , producer surplus is $ ? , and total surplus is $ ? .

If Carlos produced and Van consumed one less bottle of water, total surplus would ?

If instead, Carlos produced and Van consumed one additional bottle of water, total surplus would ?

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