elissa buys an iPod for $120 and gets consumer surplus of $80. a. What is her willingness to pay? b. If she had bought the iPod on sale for $90, what would her consumer surplus have been? c. If the price of an iPod were $250, what would her consumer surplus have been?
Q 1::: Melissa buys an iPod for $120 and gets
a. What is her
b. If she had bought the iPod on sale for $90, what would her consumer surplus have been?
c. If the price of an iPod were $250, what would her consumer surplus have been?
Q 2::: It is a hot day, and Bert is thirsty. Here is the value he places on a bottle of water:
Value of first bottle $7
Value of second bottle 5
Value of third bottle 3
Value of fourth bottle 1
a. From this information, derive Bert’s demand schedule. Graph his demand curve for bottled water.
b. If the price of a bottle of water is $4, how many bottles does Bert buy? How much consumer surplus does Bert get from his purchases? Show Bert’s consumer surplus in your graph.
c. If the price falls to $2, how does quantity demanded change? How does Bert’s consumer surplus change? Show these changes in your graph.
Q 3::: 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:
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 Ernie’s supply schedule. Graph his supply curve for bottled water.
b. If the price of a bottle of water is $4, how many bottles does Ernie produce and sell?
c. How much
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