CHAPTER 7CONSUMERS, PRODUCERS, AND THE EFFICIENCY OF MARKETS1593.It is a hot day, and Bert is very thirsty. Here is the valuehe places on a bottle of water:Value of first bottle$7Value of second bottle5Value of third bottle3Value of fourth bottle1a.From this information, derive Bert’s demandschedule. Graph his demand curve for bottledwater.b.If the price of a bottle of water is $4, how manybottles does Bert buy? How much consumersurplus does Bert get from his purchases? ShowBert’s consumer surplus in your graph.c.If the price falls to $2, how does quantity demandedchange? How does Bert’s consumer surpluschange? Show these changes in your graph.4.Ernie owns a water pump. Because pumping largeamounts of water is harder than pumping smallamounts, the cost of producing a bottle of water rises ashe pumps more. Here is the cost he incurs to produceeach bottle of water:Cost of first bottle$1Cost of second bottle3Cost of third bottle5Cost of fourth bottle7a.
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