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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:
a. The cost of producing Zlurp is $150, and the competitive suppliers sell it at this
b. Producing Zlurp creates pollution. Each bottle has an external cost of $1. Taking this additional cost into account, what is total surplus per person in the allocation you described in part (a)?
c. Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by one bottle. What happens to Cindy’s welfare (her consumer surplus minus the cost of pollution she experiences)? How does Cindy’s decision affect total surplus in Whoville?
d. MayorCrinch imposes a $1 tax on Zlurp. What is consumption per person now? Calculate consumer surplus, the external cost, government revenue, and total surplus per person.
e. Based on your calculations, would you support the mayor’s policy? Why or why not?
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Chapter 10 Solutions
Essentials of Economics (MindTap Course List)
- A linear programming computer package is needed. As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars). 6 Year 1 23. 4 Payment 160 185 210 255 285 430 The annual payments must be made at the beginning of each year. The judge will approve an amount that, along with earnings on its investment, will cover the annual payments. Investment of the funds will be limited to savings (at 4% annually) and government securities, at prices and rates currently quoted in The Wall Street Journal. Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value = $1,000). Funds not invested in these securities will be placed in savings. Security Current Price 1 $1,055 Rate (%) Years to Maturity 6.750 3 2 $1,000 5.125 Assume that interest is paid annually. The plan will be submitted to the judge and, if approved, Hoxworth will be required to…arrow_forwardPut the sections of Cornell notes in the order of completion.arrow_forwardagree or disagree with the post Hi Class! Egyptian dates are much sweeter! Due largely to their climate and geography, Egypt, Saudi Arabia, Algeria, and Iran produce more dates than either the US or Canada. Dates grow best in hot dry climates with long dry growing seasons, which these nations naturally offer. They also produce a lot of dates because of their extensive agricultural, infrastructure, and centuries-old date-growing expertise. Conversely, the U.S., there aren't many places in Canada and California that are suitable for date farming, only a select few, like the Coachella Valley, in California can produce dates on a large scale. Although California produces some dates, it is not as much as countries like Saudi Arabia and Egypt. Depending only on U.S., because of increased labor and production costs, dates grown in this way may have a limited supply and raise prices. We can obtain a greater supply of dates at competitive prices while maintaining consistent quality by…arrow_forward
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Principles of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
