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# ah2 - Answer Key Homework#2 Q.1 Problem 4 on page 152 b If...

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Answer Key Homework #2 Q.1 Problem 4 on page 152 b. If the price of a bottle is \$4, then Bert will buy 2 bottles. As seen in the graph above, he will get \$3 (=\$7-\$4) consumer surplus from the first bottle. From the second bottle, he will get \$1 consumer surplus. The total consumer surplus will be then \$4. The area of consume surplus is shown as a shaded area in the graph above. c. If the price drops to \$2, then the quantity demanded will change to 3 bottles. Then, Burt’s consumer surplus will change to \$9(=\$5+\$3+\$1). The area of new consumer surplus after the change is shown in the graph above. Q.2 Problem 5 on page 152 b. 1

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If the price of a bottle is \$4, then Ernie will produce and sell buy 2 bottles. As seen in the graph above, he will get \$3 (=\$4-\$1) producer surplus from the first bottle. From the second bottle, he will get \$1 producer surplus. The total producer surplus will be then \$4. The area of producer surplus is shown as a shaded area in the graph above.
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