Question: =+A. Explain why the following either cannot happen or, if you think it can happen, how: a. Own-price demand for a good is perfectly vertical

=+A. Explain why the following either cannot happen or, if you think it can happen, how:

a. Own-price demand for a good is perfectly vertical but taxing the good produces a deadweight loss.

b. Own-price demand is downward sloping (not vertical) and there is no deadweight loss from taxing the good.

B. Now suppose that the consumer’s tastes can be summarized by the CES utility function u1x1

, x2 2 5 10.5x1 2r 1 0.5x2 2r 2 21/r

.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Microeconomics Questions!

Q:

This is all the information given. Only need part 10.1B(a-c) struggling with the math if you could show steps involved. 10.1* Consider a good x, in a model where a consumer chooses between x, and a...

Q:

=+A. Explain why the following either cannot happen or, if you think it can happen, how: a. Own-price demand for a good is perfectly vertical but taxing the good produces a deadweight loss. b....

Q:

Consider a good x1 in a model where a consumer chooses between x1 and a composite good x2. A: Explain why the following either cannot happen or, if you think it can happen, how: (a) Own price demand...

Q:

=+10.2 Suppose that both consumption and leisure are always normal goods. Keep in mind the underlying cause for deadweight losses from wage-distorting taxation as you answer the following questions....

Q:

=+10.2 Suppose that both consumption and leisure are always normal goods. Keep in mind the underlying cause for deadweight losses from wage-distorting taxation as you answer the following questions....

Q:

Suppose that both consumption and leisure are always normal goods. Keep in mind the underlying cause for deadweight losses from wage-distoring taxation as you answer the questions below. A: Explain...

Q:

Suppose that consumption takes place this period and next period, and consumption is always a normal good. Suppose further that income now is positive and income next period is zero. A: Explain why...

Q:

=+10.3 Suppose that consumption takes place this period and next period, and consumption is always a normal good. Suppose further that income now is positive and income next period is zero. A....

Q:

=+10.3 Suppose that consumption takes place this period and next period, and consumption is always a normal good. Suppose further that income now is positive and income next period is zero. A....

Q:

HI PLEASE ANSWER ALL 1. Assume the market for apples is initially in equilibrium. Which of the following will result in a higher equilibrium price of apples? a. An increase in both the demand for and...

Q:

2. Let F K be a finite extension of prime degree. Show that there exists some a K such that F(a)= K. Such a is called a primitive element.

Q:

Suppose that you are working in a team that is trying to put together a hydropower development plan for a region in Southeast Asia. Your main responsibility is to decide the optimal capacities for...

Q:

discussion response: Looking at C&C Sports' financial performance for 2020 and 2019, there are a few key takeaways that stand out, especially when compared to the industry standards. Their current...

Q:

Server farms such as Google and Yahoo! provide enough compute capacity for the highest request rate of the day. Imagine that most of the time these servers operate at only 60% capacity. Assume...