Consider a market in which Bert from Problem 4 is the buyer and Ernie from Problem 5
Question:
Consider a market in which Bert from Problem 4 is the buyer and Ernie from Problem 5 is the seller.
a. Use Ernie’s supply schedule and Bert’s demand schedule to find the quantity supplied and quantity demanded at prices of $2, $4, and $6. Which of these prices brings supply and demand into equilibrium?
b. What are consumer surplus, producer surplus, and total surplus in this equilibrium?
c. If Ernie produced and Bert consumed one fewer bottle of water, what would happen to total surplus?
d. If Ernie produced and Bert consumed one additional bottle of water, what would happen to total surplus?
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a From Ernies supply schedule and Berts demand schedule the quantity demanded and su...View the full answer
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