Consumer Compensation. Consider the story of Coca-Cola and the scoreboard in the chapter. Your job is to fully compensate each student for the cost associated with the soft-drink monopoly. Suppose CocaCola increased the price of soft drinks by $0.20 per can and each student consumed 10 soft drinks before the monopoly was granted.
a. Kate continues to buy 10 soft drinks at the higher price. What is the appropriate compensation for her?
b. Elise buys only 4 soft drinks at the higher price. Her demand curve is linear. What is her appropriate compensation? Draw a graph that shows her change in consumer surplus.