Your total benefits from consuming different quantities of gas each week are shown in the following table.
Question:
Your total benefits from consuming different quantities of gas each week are shown in the following table.
a. Complete the marginal benefit column starting with the step from 0 gallons to 1 gallon per week.
b. The price of gasoline is $4 per gallon. Use the Principle of Optimization at the Margin to find an optimal number of gallons of gas to consume each week.
c. Some people have suggested a tax of $2 per gallon of gasoline as a way to reduce global warming. (Burning fossil fuels such as gasoline releases greenhouse gases, which are a cause of global warming.) Suppose the price of gasoline (including the tax) rises to $6 per gallon. Use the Principle of Optimization at the Margin to find an optimal number of gallons of gasoline given this new tax on gasoline.
Step by Step Answer:
Macroeconomics
ISBN: 9780367752279
Global Edition
Authors: Acemoglu Daron, Laibson David, List John.