1)It is a hot day, and Carlos is thirsty. Here is the value he places on a bottle of water: Value of first bottle: $9 Value of second bottle: $7 Value of third bottle: $4 Value of fourth bottle: $1 From this information, complete the following table by deriving Carlos’s demand schedule. Price Quantity Demanded More than $9   $7.01 to $9   $4.01 to $7   $1.01 to $4   $1 or fewer

Economics Today and Tomorrow, Student Edition
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Chapter7: Demand And Supply
Section: Chapter Questions
Problem 20AA
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1)It is a hot day, and Carlos is thirsty. Here is the value he places on a bottle of water:

Value of first bottle:

$9

Value of second bottle:

$7

Value of third bottle:

$4

Value of fourth bottle:

$1

From this information, complete the following table by deriving Carlos’s demand schedule.

Price

Quantity Demanded

More than $9

 

$7.01 to $9

 

$4.01 to $7

 

$1.01 to $4

 

$1 or fewer

 

2)Based on Carlos's willingness to pay, plot Carlos's demand curve as a step function on the following graph using blue points (circle symbol) beginning at a quantity of 0 bottles of water. Please do the graph 

 

3)Suppose the price of a bottle of water is $6.

Use the black line (plus symbol) to draw a price line at $6. Next use the grey point (star symbol) to indicate how many bottles of water Carlos will buy at that price. Finally, use the green point (triangle symbol) to shade the area that represents Carlos's consumer surplus from his purchases.

In this case, Carlos receives __$   ___ in consumer surplus from his water purchase.

If the price falls to $3, Carlos now buys________bottles of water. This __increase/decrease__  his consumer surplus to ___$___.

Based on Carlos's willingness to pay, plot Carlos's demand curve as a step function on the following graph using blue points (circle symbol) beginning
at a quantity of 0 bottles of water.
10
Carlos's Demand
8
7
6
Price = $6
4
Quantity Purchased
2
Consumer Surplus
1
1
4
Quantity of Water
Suppose the price of a bottle of water is $6.
Use the black line (plus symbol) to draw a price line at $6. Next use the grey point (star symbol) to indicate how many bottles of water Carlos will buy
at that price. Finally, use the green point (triangle symbol) to shade the area that represents Carlos's consumer surplus from his purchases.
Price of Water
LO
Transcribed Image Text:Based on Carlos's willingness to pay, plot Carlos's demand curve as a step function on the following graph using blue points (circle symbol) beginning at a quantity of 0 bottles of water. 10 Carlos's Demand 8 7 6 Price = $6 4 Quantity Purchased 2 Consumer Surplus 1 1 4 Quantity of Water Suppose the price of a bottle of water is $6. Use the black line (plus symbol) to draw a price line at $6. Next use the grey point (star symbol) to indicate how many bottles of water Carlos will buy at that price. Finally, use the green point (triangle symbol) to shade the area that represents Carlos's consumer surplus from his purchases. Price of Water LO
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