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m... m... mumm- um. uuu account, total surplus per person in the allocation you previously determined decreases to 1 Cindy Lou Who, one of the
"m...\" m... \"mumm- um. uuu account, total surplus per person in the allocation you previously determined decreases to 1 Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by 1 bottle. Cindy's consumer surplus (ignoring the cost of pollution she experiences} is now '1' ]_ . Her decision v total surplus in Whoville byiS i . Mayor Gn'nch imposes a $2 tax on each bottle of Zlurp. Consumption per person is now ' bottles. This yields a perperson consumer surplus of! 7 not including the cost of pollution, a per- person external cost of ' f and government revenue of , per person. Total surplus per person is now) u as a result of this policy. (Hint: Total surplus is equal to consumer surplus minus the external cost of pollution plus government revenue.) Based on your calculations, you 7 5 support the mayor's policy because it y '7: welfare compared to before the tax. EE Q Search
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