Question

Gilberto 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: $4 Cost
2. Problems 7-5 Gilberto 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: $4 Cost of third bottle: $7 Cost of fourth bottle: $9 From this information, complete the following table by deriving Gilberto's supply schedule. Price Quantity Supplied $1 or less $1 to $4 $4 to $7 $7 to $9 More than $9
please refer to photos

of third bottle: $7 Cost of fourth bottle: $9 From this information, complete the following table by deriving Gilberto's supply schedule. Price Quantity Supplied $1 or less $1 to $4 $4 to $7 $7 to $9 More than $9 Based on Gilberto's willingness to sell, plot his supply curve as a step function on the following graph using the orange points (square symbol). Be sure to plot your first point at (0, 0). Gilberto's Supply Price = $5 Quantity Sold Producer Surplus 0 1 2 3 4 5 10 9 8 7 6 5 4 3 2 1 0 Price of Water Quantity of Water Suppose the price of a bottle of water is $5. Use the black line (plus symbol) to draw a price line at $5. Next use the grey point (star symbol) to indicate how many bottles of water Gilberto will produce and sell at that price. Finally, use the purple point (diamond symbol) to shade the area that represents Gilberto's producer surplus. In this case, Gilberto receivesin producer surplus from his water sales. If the price rises to $8, Gilberto now sellsbottles of water. This his producer surplus to.

Answer 1

(1)

Price	Quantity supplied
$1 or less	0
$1 to $4	1
$4 to $7	2
$7 to $9	3
More than $9	4

(2)

When price is $5, quantity sold is 2 units.

PS = Area between actual price and supply curve

Gilberto's Supply Price = $5 Price of Water Quantity Sold Producer Surplus 3 Quantity of Water

(3) When price is $5,

PS = $(5 - 4) x 2 + $(4 - 1) x 1 = $1 x 2 + $3 x 1 = $2 + $3 = $5

(4)

When price is $8, he sells 3 bottles.

New PS = $(8 - 7) x 3 + $(7 - 4) x 2 + $(4 - 1) x 1 = $1 x 3 + $3 x 2 + $3 x 1 = $3 + $6 + $3 = $12

This Increases PS by $7 (= $12 - $5).