suppose we want to evaluate a public program intervention designed to reduce carbon dioxide emissions. To evaluate the efficiency impact, we need to estimate the benefits to consumers of the reduction in air particulate emissions (and then compare to the costs of the intervention). a. We can use indifference curve analysis to approach this valuation problem. In particular, draw an indifference curve diagram to represent the preferences between All Other Goods Consumption and CO2 Emissions for a representative consumer in the economy. Do your indifference curves look like those from the All Other Goods/Housing consumption diagram in lecture? Explain. b. Suppose the consumer in part a. is currently consuming $30,000 of All of Goods and is exposed to 10 units of CO2 Emissions. The program is predicted to reduce CO2 Emissions to 5 units. How would you measure the benefits to the consumer of the 5 unit reduction of CO2 Emissions on your indifference curve diagram? Hint: What is the most the consumer would be willing to pay for the Emissions reduction? c. Suppose instead that you approach this valuation problem with choice bundles consisting of All Other Goods Consumption and CO2 Emissions Reduction. Draw an indifference curve diagram to represent the preferences between All Other Goods Consumption (y- axis) and CO2 Emissions Reduction (x-axis). How would you measure the benefits from the same 5 unit Reduction (note: you start from Reduction = 0) of CO2 Emissions on your indifference curve diagram? d. Suppose there is a second consumer in the neighborhood who is impacted by the air quality improvement program. The second consumer has higher income, and is currently consuming $60,000 of AOG and 10 units of CO2 Emissions. Would you expect her benefits from the Emissions Reduction to be larger, smaller, or the same as the benefits to the consumer in part c.? What does this imply about the shape of her indifference curve over the relevant range of values relative to the indifference curve for the consumer in part c?