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Q5 part question-microeconomics

The many identical residents of whoville love drinking zlurp. Each resident has the following willingness to pay for the tasty refreshment:
first bottle-$5
second bottle-$4
third bottle-$3
fourth bottle-$2
fifth bottle-$1
further bottles-$0
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1 answers.
#1BerdiaAnswered at 2013-03-02 15:53:28
To find consumer surplus you must find the difference between what the maximum amount the consumer is willing to spend and the cost of the good inquestion. So for the first bottle the surplus will be $3.5 (5-1.5). You subtract the cost from each bottle until the consumer does not have any surplus(5th bottle)
B) If you impose a tax on any good then you are taking away from the consumer surplus, which means you will subtract the amount of the tax from theprevious surplus meaning that you must now subtract $2.5 (The third bottle is the last bottle where the consumer will have surplus
C) If a consumer decides to restrict consumption by a good, in this case going from 5 bottles to Four bottles then they are now only willing to pay $4total, so you must now account for $1 less in money willing to be spent
D) if there is a pollution cost you must now add another $1, bringing the total cost to $3.5 so the the consumer is now only willing to buy 2 bottles
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