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The many identical residents of Whoville love drinking Zlurp. Each resident has the following willingness to pay for the tasty refreshment: Quantity First bottle Second bottle Third bottle Fourth bottle Fifth bottle Further bottles Willingness to Pay (Dollars) 10 8 6 4 Each Whovillian will The cost of producing a bottle of Zlurp is $3.50, and the competitive suppliers sell it at this price. (The supply curve is horizontal.) 2 0 bottles rec Producing Zlurp creates pollution. Each bottle has an external cost of $1. consumer surplus of Taking this additional cost into account, total surplus per person in the allocation you previously determined decreases to $ Consumption per person is now Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by 1 bottle. Cindy's consumer surplus (ignoring the cost of pollution she experiences) is now $ by $ Mayor Grinch imposes a $1 tax on each bottle of Zlurp. Her decision bottles. This yields a per-person consumer surplus of $ increases decreases total surplus in Whoville not including the cost of pollution, a per-

The many identical residents of Whoville love drinking Zlurp. Each resident has the following willingness to pay for the tasty refreshment: Quantity First bottle Second bottle Third bottle Fourth bottle Fifth bottle Further bottles Willingness to Pay (Dollars) 10 8 6 4 Each Whovillian will The cost of producing a bottle of Zlurp is $3.50, and the competitive suppliers sell it at this price. (The supply curve is horizontal.) 2 0 bottles rec Producing Zlurp creates pollution. Each bottle has an external cost of $1. consumer surplus of Taking this additional cost into account, total surplus per person in the allocation you previously determined decreases to $ Consumption per person is now Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by 1 bottle. Cindy's consumer surplus (ignoring the cost of pollution she experiences) is now $ by $ Mayor Grinch imposes a $1 tax on each bottle of Zlurp. Her decision bottles. This yields a per-person consumer surplus of $ increases decreases total surplus in Whoville not including the cost of pollution, a per-

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The cost of producing a bottle of Zlurp is $3.50, and the competitive suppliers sell it at this price. (The supply curve is horizontal.) Each Whovillian will consume Producing Zlurp creates pollution. Each bottle has an external cost of $1. bottles and receive a consumer surplus of $ Taking this additional cost into account, total surplus per person in the allocation you previously determined decreases to $ Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by 1 bottle. Cindy's consumer surplus (ignoring the cost of pollution she experiences) is now $ by $ Mayor Grinch imposes a $1 tax on each bottle of Zlurp. Consumption per person is now person external cost of $ this policy. (Hint: Total surplus i Based on your calculations, you bottles. This yields a per-person consumer surplus of $ vernment revenue of $ would would not Her decision not including the cost of pollution, a per- per person. Total surplus per person is now $ as a result of nsumer surplus minus the external cost of pollution plus government revenue.) support the mayor's policy because it total surplus in Whoville welfare compared to before the tax.
Transcribed Image Text:The cost of producing a bottle of Zlurp is $3.50, and the competitive suppliers sell it at this price. (The supply curve is horizontal.) Each Whovillian will consume Producing Zlurp creates pollution. Each bottle has an external cost of $1. bottles and receive a consumer surplus of $ Taking this additional cost into account, total surplus per person in the allocation you previously determined decreases to $ Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by 1 bottle. Cindy's consumer surplus (ignoring the cost of pollution she experiences) is now $ by $ Mayor Grinch imposes a $1 tax on each bottle of Zlurp. Consumption per person is now person external cost of $ this policy. (Hint: Total surplus i Based on your calculations, you bottles. This yields a per-person consumer surplus of $ vernment revenue of $ would would not Her decision not including the cost of pollution, a per- per person. Total surplus per person is now $ as a result of nsumer surplus minus the external cost of pollution plus government revenue.) support the mayor's policy because it total surplus in Whoville welfare compared to before the tax.
The many identical residents of Whoville love drinking Zlurp. Each resident has the following willingness to pay for the tasty refreshment: Quantity First bottle Second bottle Third bottle Fourth bottle Fifth bottle Further bottles Willingness to Pay (Dollars) 10 8 6 4 2 0 The cost of producing a bottle of Zlurp is $3.50, and the competitive suppliers sell it at this price. (The supply curve is horizontal.) Each Whovillian will consume O bottles and receive a consumer surplus of $ Producing Zlurp creates pollution. Each bottle has an external cost of $1. Taking this additional cost into account, total surplus per person in the allocation you previously determined decreases to $ Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by 1 bottle. Cindy's consumer surplus (ignoring the cost of pollution she experiences) is now $ by $ Consumption per person is now person external cost of $ Mayor Grinch imposes a $1 tax on each bottle of Zlurp. Her decision increases bottles. This yields a per-person consumer surplus of $ and government revenue of $ decreases total surplus in Whoville not including the cost of pollution, a per- per person. Total surplus per person is now $ as a result of
Transcribed Image Text:The many identical residents of Whoville love drinking Zlurp. Each resident has the following willingness to pay for the tasty refreshment: Quantity First bottle Second bottle Third bottle Fourth bottle Fifth bottle Further bottles Willingness to Pay (Dollars) 10 8 6 4 2 0 The cost of producing a bottle of Zlurp is $3.50, and the competitive suppliers sell it at this price. (The supply curve is horizontal.) Each Whovillian will consume O bottles and receive a consumer surplus of $ Producing Zlurp creates pollution. Each bottle has an external cost of $1. Taking this additional cost into account, total surplus per person in the allocation you previously determined decreases to $ Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by 1 bottle. Cindy's consumer surplus (ignoring the cost of pollution she experiences) is now $ by $ Consumption per person is now person external cost of $ Mayor Grinch imposes a $1 tax on each bottle of Zlurp. Her decision increases bottles. This yields a per-person consumer surplus of $ and government revenue of $ decreases total surplus in Whoville not including the cost of pollution, a per- per person. Total surplus per person is now $ as a result of
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