2. Ch. 7 Problems and Applications Q5

Edison 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 Edison's supply schedule.

Price	Quantity Supplied
More than $9
$7 to $9
$4 to $7
$1 to $4
$1 or less

Based on Edison'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).

10 Edison's Supply + 6 Price = $5 5 Price of Water 4 Quantity Sold O Producer Surplus O 2 3 4 Quantity of WaterIn this case, Edison receives in producer surplus from his water sales. If the price rises to $3, Edison now sells \\:| bottles of water. This V his producer surplus to