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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

It is a hot day, and Bert is thirsty. Here is the value he places on each 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.

Subpart (a):

To determine
The demand curve for water and the consumer surplus.

Explanation

We have given the value that the individual gives to each additional bottled of water and it can be tabulated as follows:

Price Quantity demanded
More than $7 0
$5 to $7 1
$3 to $5 2
$1 to $3 3

Subpart (b):

To determine
The demand curve for water and the consumer surplus.

Subpart (c):

To determine
The demand curve for water and the consumer surplus.

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