Your total benefits from consuming different quantities of gas each week are shown in the following table.

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Your total benefits from consuming different quantities of gas each week are shown in the following table.image text in transcribed

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.

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Macroeconomics

ISBN: 9780367752279

Global Edition

Authors: Acemoglu Daron, Laibson David, List John.

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