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

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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
A
C
D
$0.75
Which people will choose to buy gas and lower social surplus in the process?
(]A
() B
(] C
() D
Transcribed Image Text: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 A C D $0.75 Which people will choose to buy gas and lower social surplus in the process? (]A () B (] C () D
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