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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 Rajiv will produce and sell at that price. Finally, use the purple point (diamond symbol) to shade the area that represents Rajiv's producer surplus. In this case, Rajiv receives $ in producer surplus from his water sales. If the price rises to $8, Rajiv now sells bottles of water. This his producer surplus to $

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 Rajiv will produce and sell at that price. Finally, use the purple point (diamond symbol) to shade the area that represents Rajiv's producer surplus. In this case, Rajiv receives $ in producer surplus from his water sales. If the price rises to $8, Rajiv now sells bottles of water. This his producer surplus to $

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter7: Consumers, Producers, And The Efficiency Of Markets
Section: Chapter Questions
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Rajiv 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 Rajiv's supply schedule. Price $1 or less Quantity Supplied $1 to $4 $4 to $7 $7 to $9 More than $9 Based on Rajiv'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). Price of Water 3 2 1 10 9 8 7 6 5 0 1 2 3 5 Quantity of Water Suppose the price of a bottle of water is $5. Rajiv's Supply Price = $5 * Quantity Sold Producer Surplus ? 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 Rajiv will produce and sell at that price. Finally, use the purple point (diamond symbol) to shade the area that represents Rajiv's producer surplus. In this case, Rajiv receives $ in producer surplus from his water sales. If the price rises to $8, Rajiv now sells bottles of water. This his producer surplus to
Transcribed Image Text:Rajiv 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 Rajiv's supply schedule. Price $1 or less Quantity Supplied $1 to $4 $4 to $7 $7 to $9 More than $9 Based on Rajiv'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). Price of Water 3 2 1 10 9 8 7 6 5 0 1 2 3 5 Quantity of Water Suppose the price of a bottle of water is $5. Rajiv's Supply Price = $5 * Quantity Sold Producer Surplus ? 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 Rajiv will produce and sell at that price. Finally, use the purple point (diamond symbol) to shade the area that represents Rajiv's producer surplus. In this case, Rajiv receives $ in producer surplus from his water sales. If the price rises to $8, Rajiv now sells bottles of water. This his producer surplus to
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