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1. Suppose a consumer's expenditure function is given by the expression m = U . E . f(p) Where m is the expenditure required to
1. Suppose a consumer's expenditure function is given by the expression m = U . E . f(p) Where m is the expenditure required to achieve utility level U when pollution emissions to which the consumer is exposed are E, and where f (p) is a function that is increasing in prices of consumption goods p. a) Derive the marginal damage function, write it out, and sketch a diagram that correctly illustrates this marginal damage function. b) Suppose pollution emissions increase from level E, to E, . Explain how you would use the expenditure function to measure the increase in the total damages to the consumer
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