QUESTION 6 1000 identical residents of Eureka have the following demand function for AltaCola D=5 - P. The cost of producing each unit of AltaCola is 1. AltaCola has many producers (the company that made it chose not to patent their secret recipe, but the recipe got out) who sell AltaCola for a price equal to it's marginal cost (the supply curve is horizontal). Each unit of AtlaCola produced creates pollution. The well being of residents of Eureka can be described by their consumer surplus of AltaCola, minus their disutility from the pollution of the AltaCola plants W=CS-e* X where X is the total amount of AltaCola consumed by ALL the residents of Eureka. Each unit of AltaCola produced harms each resident e = 1/1000 so the total harm per unit of AltaCola is 1. A tax of $1 for each bottle of AltaCola is proposed. The tax revenue will be rebated to the residents. Each individual chooses A = 3. How much higher is Betty's welfare W under the tax2 (notice that tax revenue is still surplus to the residents - but because the total revenue depends on X, it is approximately true that the rebate each individual receives does not depend on A) QUESTION 6 1000 identical residents of Eureka have the following demand function for AltaCola D=5 - P. The cost of producing each unit of AltaCola is 1. AltaCola has many producers (the company that made it chose not to patent their secret recipe, but the recipe got out) who sell AltaCola for a price equal to it's marginal cost (the supply curve is horizontal). Each unit of AtlaCola produced creates pollution. The well being of residents of Eureka can be described by their consumer surplus of AltaCola, minus their disutility from the pollution of the AltaCola plants W=CS-e* X where X is the total amount of AltaCola consumed by ALL the residents of Eureka. Each unit of AltaCola produced harms each resident e = 1/1000 so the total harm per unit of AltaCola is 1. A tax of $1 for each bottle of AltaCola is proposed. The tax revenue will be rebated to the residents. Each individual chooses A = 3. How much higher is Betty's welfare W under the tax2 (notice that tax revenue is still surplus to the residents - but because the total revenue depends on X, it is approximately true that the rebate each individual receives does not depend on A)