Question

6. Problems and Applications Q6 Suppose Larry is the only seller in the market for bottled water and Felix is the only buyer. The following lists show the value Felix places on a bottle of water and the cost Larry incurs to produce each bottle of water: Felix's Value Larry's Costs Value of first bottle: $9 Cost of first bottle: $1 Value of second bottle: $7 Cost of second bottle: $4 Value of third bottle: $4 Cost of third bottle: $7 Value of fourth bottle: $1 Cost of fourth bottle: $9 The following table shows their respective supply and demand schedules: Price Quantity Demanded Quantity Supplied $1 or less 4 0 $1 to $4 3 1 $4 to $7 2 2 $7 to $9 1 4 More than $9 0 Use Larry's supply schedule and Felix's demand schedule to find the quantity supplied and quantity demanded at prices of $2, $5, and $8. Enter these values in the following table. Price Quantity Demanded Quantity Supplied 2 5 A price of brings supply and demand into equilibrium. producer surplus is $ At the equilibrium price, consumer surplus is $ ,and total surpl us is If Larry produced and Felix consumed one less bottle of water, total surplus would If instead, Larry produced and Felix consumed one additional bottle of water, total surplus would

Answer 1

A prict of ts bunis Ss= DD 44 2-6 2 Consumer suydlus Producer Suryples 2 2 Lary producadd Aelek ensemas On less bstll ten totas urylas ush 9-1=8 ene addiltonlbotee