ISI micro. 2017

[Econ17]

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[Daffodils]

Even I didn't get this

[Asd1995]

For first, best response of h consumer i is simply maximizing their own utility wrt xi

So consumer solves v'(x) =0 regardless of how many people are there, since the amount they drive is independent of xi.

For taxing, person i solves their utility for their best response.

Hence all xi are same, now planners problem is maximising total utility with all xi =x. Solve and you'll get it.