Consider the following two-person (1 and 2) two-good (X and Y) economy. The utility of person...
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Consider the following two-person (1 and 2) two-good (X and Y) economy. The utility of person i is given by 1 U = b;x; y? where x; and y; denote respectively person i's the consumption amount of good X and good Y, i=1, 2. The value of parameter b; is b = 4 for person 1 and b = 1 for person 2. Person 1's income is M = 1050 and person 2's income is M = 1830 dollars. The price of good X and price of good Y are given respectively by px = 10 and py = 10. Suppose the government imposes a per-unit tax tx on good X on the person with the greater income (and if their incomes are equal, imposes it on person 2) and gives the other person a per-unit subsidy sy on good Y such that its budget is balanced (i.e., the total tax amount collected from one person is equal to the total subsidy amount given to the other person). Find the value of the per-unit subsidy sy given the per-unit tax is tx = 2. Then enter the value of the per-subsidy below. Answer: Consider the following two-person (1 and 2) two-good (X and Y) economy. The utility of person i is given by 1 U = b;x; y? where x; and y; denote respectively person i's the consumption amount of good X and good Y, i=1, 2. The value of parameter b; is b = 4 for person 1 and b = 1 for person 2. Person 1's income is M = 1050 and person 2's income is M = 1830 dollars. The price of good X and price of good Y are given respectively by px = 10 and py = 10. Suppose the government imposes a per-unit tax tx on good X on the person with the greater income (and if their incomes are equal, imposes it on person 2) and gives the other person a per-unit subsidy sy on good Y such that its budget is balanced (i.e., the total tax amount collected from one person is equal to the total subsidy amount given to the other person). Find the value of the per-unit subsidy sy given the per-unit tax is tx = 2. Then enter the value of the per-subsidy below. Answer:
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Related Book For
Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
Posted Date:
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