Consumer and Producer Surplus

Suppose Rajiv is the only seller in the market for bottled water and Kevin is the only buyer. The following lists show the value Kevin places on a bottle of water and the cost Rajiv incurs to produce each bottle of water:

	Kevin's Value
Value of first bottle:	$10
Value of second bottle:	$7
Value of third bottle:	$3
Value of fourth bottle:	$1

	Rajiv's Costs
Cost of first bottle:	$1
Cost of second bottle:	$3
Cost of third bottle:	$7
Cost of fourth bottle:	$10

The following table shows their respective supply and demand schedules:

Price	Quantity Supplied	Quantity Demanded
More than $10	4	0
$7 to $10	3	1
$3 to $7	2	2
$1 to $3	1	3
$1 or less	0	4

Use Rajiv's supply schedule and Kevin's demand schedule to find the quantity supplied and quantity demanded at prices of $2, $6, and $9. Enter these values in the following table.

Price	Quantity Supplied	Quantity Demanded
2
6
9

A price of ($2 or $6 or $9) brings supply and demand into equilibrium.

At the equilibrium price, consumer surplus is $______, producer surplus is

$______, and total surplus is &______.

If Rajiv produced and Kevin consumed one less bottle of water, the total surplus would ( rise or fall).

If instead, Rajiv produced and Kevin consumed one additional bottle of water, the total surplus would (fall or rise).