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 C. $1.01 $0.75 Which people will choose to buy gas and lower social surplus in the process? DA

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 C. $1.01 $0.75 Which people will choose to buy gas and lower social surplus in the process? DA

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 40P: Show the market for cigarettes in equilibrium, assuming that there are no laws banning smoking in...

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