Question 1:

It is a hot day, and Elmo is thirsty. Here is the value of Elmo places on a bottle of water:]

Value of first bottle $7

Value of second bottle $5

Value of third bottle $3

Value of fourth bottle $1

1. From this information, derive Elmo's demand schedule. Then graph his demand curve for bottled water.

2. If the price of a bottle of water is $4, how many bottles does Elmo buy? How much consumer surplus does Elmo get from his purchases? Show Elmo's consumer surplus in your graph.

3. If the price falls to $2, how does the quantity demanded change? How does Elmo's consumer surplus change? Show these changes in your graph.

question 2:

The supply and demand for broccoli are described by the following equations:

Supply: Q^s= 4P - 80, Demand: Q^D=100-2P

Q is in bushels, and P is in dollars per bushel.

a. Graph the supply curve and the demand curve. What are the equilibrium price and quantity?

b. Calculate consumer surplus, producer surplus, and total surplus at the market equilibrium.