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The many identical residents of Whoville love drinking zlurps. Each of the residents has the following willingness to pay for the tasty refreshment. a. The
The many identical residents of Whoville love drinking zlurps. Each of the residents has the following willingness to pay for the tasty refreshment. a. The cost of producing Zlurp is $150, and the competitive suppliers sell it at this price. (The supply curve is horizontal.) How many bottles will each do Whovillian consume? What is each person's consumer surplus? b.Producing Zlurp creates pollution. Each bottle has an external cost of $1.Taking this additional cost into account, what is total surplus per person in the allocation you described in part (a)? C. Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by one bottle. What happens to Cindy's welfare (her consumer surplus minus the cost of pollution she experiences)? How does Cindy's decision affect the total surplus in Whoville? The many identical residents of Whoville love drinking zlurps. Each of the residents has the following willingness to pay for the tasty refreshment. a. The cost of producing Zlurp is $150, and the competitive suppliers sell it at this price. (The supply curve is horizontal.) How many bottles will each do Whovillian consume? What is each person's consumer surplus? b.Producing Zlurp creates pollution. Each bottle has an external cost of $1.Taking this additional cost into account, what is total surplus per person in the allocation you described in part (a)? C. Cindy Lou Who, one of the residents of Whoville, decides on her own to reduce her consumption of Zlurp by one bottle. What happens to Cindy's welfare (her consumer surplus minus the cost of pollution she experiences)? How does Cindy's decision affect the total surplus in Whoville
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