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Business, 07.08.2021 01:00 chelsey54

One method of dealing with a negative externality is to set quotas on the consumption of the good. Suppose that there are only two consumers of a good with a negative externality, Nicole and Andrew. Their willingness-to-pay schedules are given below. Quantity Nicole's Willingness to Pay Andrew's Willingness to Pay 1 50 25 2 40 20 3 30 15 4 20 10 5 10 5 Suppose that the government wishes to limit consumption of this good to 6 units, and thus sets a consumption quota of 3 units on each consumer. If the price of the good is $15, each consumer will purchase the three units allowed. Instructions: Enter your answer as a whole number. a. Total consumer surplus is: $ . b. The resulting distribution of resources is (Click to select) . c. Consumer surplus (and thus social surplus) at the same output: multiple choice 2 would increase if fewer units were consumed. would increase if Nicole received fewer units and Andrew received more units. is maximized at the current equal distribution of goods. would increase if Nicole received more units and Andrew received fewer units.

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One method of dealing with a negative externality is to set quotas on the consumption of the good. S...
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