2. In the diagram below, mark the appropriate line segment that measures a) a respondent's maximum willingness to pay (WTP) to avoid a degradation of environmental quality and b) a respondent’s minimum amount of compensation that will be acceptable (WTA) if the change takes place. Are these the same or they potentially different? Note that x represents the composite bundle of market goods and q represents environmental quality and the utility levels associated with the individual's indifference curve is such that U1

2. In the diagram below, mark the appropriate line segment that measures a) a respondent's maximum willingness to pay (WTP) to avoid a degradation of environmental quality and b) a respondent’s minimum amount of compensation that will be acceptable (WTA) if the change takes place. Are these the same or they potentially different? Note that x represents the composite bundle of market goods and q represents environmental quality and the utility levels associated with the individual's indifference curve is such that U1

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.7P

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