3. a. Bert's demand schedule is: Price Quantity Demanded More ...
3. a. Bert's demand schedule is: Price Quantity Demanded More ...
3. a. Bert's demand schedule is: Price Quantity Demanded More ...
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c. If Ernie produced one fewer bottle, h<strong>is</strong> producer surplus would decline to $3, as<br />
shown in problem 4. If Bert consumed one fewer bottle, h<strong>is</strong> consumer surplus<br />
would decline to $3, as shown in problem <strong>3.</strong> So total surplus would decline to $3<br />
+ $3 = $6.<br />
d. If Ernie produced one additional bottle of water, h<strong>is</strong> cost would be $5, but the<br />
price <strong>is</strong> only $4, so h<strong>is</strong> producer surplus would decline by $1. If Bert consumed<br />
one additional bottle of water, h<strong>is</strong> value would be $3, but the price <strong>is</strong> $4, so h<strong>is</strong><br />
consumer surplus would decline by $1. So total surplus declines by $1 + $1 =<br />
$2.