Suppose that each gallon of gasoline purchased causes $0.50 of external damage on society due to pollution. The WTP for a gallon of gasoline for a few people is shown in the table below and the marginal private cost and price of gasoline are both $1/gallon. Each person can only buy 1 gallon of gas. person WTP $2 $1.25 $1.01 $0.75 A В C Which people will choose to buy gas and lower social surplus in the process? [(]A () B ABCD

Suppose that each gallon of gasoline purchased causes $0.50 of external damage on society due to pollution. The WTP for a gallon of gasoline for a few people is shown in the table below and the marginal private cost and price of gasoline are both $1/gallon. Each person can only buy 1 gallon of gas. person WTP $2 $1.25 $1.01 $0.75 A В C Which people will choose to buy gas and lower social surplus in the process? [(]A () B ABCD

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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