Adam 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 Adam's supply schedule. Graph his supply curve for bottled water. b. If the price of a bottle is $4, how many bottles does Adam's produce and sell? How much producer surplus does Adam's get from these sales? Show Adam's producer surplus in your graph. c. If the price rises $6, how does quantity supplied change? How does Adam's producer surplus change? Show these changes in your graph.
Adam 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 Adam's supply schedule. Graph his supply curve for bottled water. b. If the price of a bottle is $4, how many bottles does Adam's produce and sell? How much producer surplus does Adam's get from these sales? Show Adam's producer surplus in your graph. c. If the price rises $6, how does quantity supplied change? How does Adam's producer surplus change? Show these changes in your graph.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter7: Consumers, Producers, And The Efficiency Of Markets
Section: Chapter Questions
Problem 5PA
Related questions
Question
1. Adam 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 Adam's supply schedule. Graph his supply curve for bottled water.
b. If the price of a bottle is $4, how many bottles does Adam's produce and sell? How much producer surplus does Adam's get from these sales?
Show Adam's producer surplus in your graph.
c. If the price rises $6, how does quantity supplied change? How does Adam's producer surplus change? Show these changes in your graph.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning