Your total benefits from consuming different quantities of gasoline each week are shown in the table below:

Question:

Your total benefits from consuming different quantities of gasoline each week are shown in the table below:

a. Complete the marginal benefit column.

b. Gasoline currently costs $4 per gallon. Use the Principle of Optimization at the Margin to find your optimal number of gallons of gas to consume each week.

c. Some people have suggested a tax of $2 per gallon of gas as a way to reduce global warming (burning fossil fuels such as gas releases greenhouse gases which are a major cause of rising temperatures). Suppose the price of gas rises to $6 per gallon. Use the Principle of Optimization at the Margin to find your optimal number of gallons of gas given this new tax on gas.

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Microeconomics

ISBN: 978-1292079578

Global Edition 1st Edition

Authors: David Laibson, John List

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