Estimate the social surplus gain obtained when moving from a flat monthly water fee of $250 per household and an average monthly consumption of 100 m³, to a consumption-based price of $1.9/m³, given the following slope estimate from existing studies of comparable municipalities: 

for every $1 increase in the price of water, consumption dropped by 40m³.

(hint: we can go ahead and plot the equation q=Q_max+β_ave×p as representing the demand curve. Note that in order to plot it in the useful format of Figure, we need to represent the equation of the inverse demand curve (price as a function of quantity)

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To estimate the social surplus gain obtained when moving from a flat monthly water fee to a consumptionbased price we need to calculate the consumer s... View the full answer