Suppose there are 1000 consumers of a good. Half of the consumers each has a MWTP A = 100 – 100q, and the other half each has a MWTP B = 50 – 50q.

  1. Suppose there are 1000 consumers of a good. Half of the consumers each has a MWTP A = 100 – 100q, and the other half each has a MWTP B = 50 – 50q. The good is distributed by the government in a way to maximize social welfare. There are 700 units of the good and assume that the good is divisible (so an individual can be allocated a partial unit). How many units are consumed by Group B (as a whole)? show all work including graphs and calculations.
  2. Repeat Q#1 but now assume that the good is measured in indivisible units (for instance they are units of a fruit). How many units will be consumed by group B (as a whole)? show all work including graphs and calculations.
 
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