1. 11. Three roommates—Tinker, Evers, and Chance—share an apartment. It is really cold outside, and they are considering turning up the thermostat in the apartment by 1, 2, 3, or 4 degrees. They know that each time they raise the temperature in the apartment by 1 degree, their heating bill will rise by $8. Their individual marginal benefits from making it warmer in the apartment are as follows:

Increase in Temperature 1 degree 2 degrees 3 degrees Marginal Benefit Tinker

$5 Evers Chance

$4

$4

$3 4 degrees

$2

$3

$2

$1

$3

$2

$1

$0

a. Find the marginal social benefit from making it 1, 2, 3, or 4 degrees warmer.

b. By how many degrees should they raise the temperature?

12. Suppose demand is QD =16−P and supply is constant positive externality of $4 per unit

(Marginalexternalbenefit = $4).

QS =P.

There is a Find the maximum possible social surplus.