It is a hot day, and Bert is thirsty. Here is the value he 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
From this information, complete the following table by deriving Bert’s demand schedule.
Price Quantity Demanded
More than $7
$5.01 to $7
$3.01 to $5
$1.01 to $3
$1 or less
Based on Bert’s willingness to pay, plot Bert’s demand curve on the following graph using blue points (circle symbol) beginning at a quantity of 0 bottles of water.
Bert's DemandPrice = $4Quantity PurchasedConsumer Surplus01234576543210Price of WaterQuantity of Water
Suppose the price of a bottle of water is $4.
Use the black line (plus symbol) to draw a price line at $4. Next use the grey point (star symbol) to indicate how many bottles of water Bert will buy at that price. Finally, use the green point (triangle symbol) to shade the area that represents Bert’s consumer surplus from his purchases.
In this case, Bert receivesin consumer surplus from his water purchase.
If the price falls to $2, Bert now buysbottles of water. This his consumer surplus to.