Consumer Compensation. Consider the chapter opener about campus beverage monopolies. Your job is to fully compensate each student for the cost associated with a soft-drink monopoly. Suppose Coca-Cola...

Consumer Compensation. Consider the chapter opener about campus beverage monopolies. Your job is to fully compensate each student for the cost associated with a soft-drink monopoly. Suppose Coca-Cola 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 four 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.