The demand for X is given by X = 100 - 2P x , and its supply
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The demand for X is given by X = 100 - 2Px, and its supply is perfectly elastic at Px = 14. The demand for Y is given by Y = 350 - 3Py, and its supply is perfectly elastic at Py = 18. The government aims to raise R dollars by imposing ad valorem taxes tx and ty on the consumption of X and Y. What is the optimal ratio of taxes tx/ty according to the inverse elasticity rule? If R = $1,000, what are the optimal solutions for tx and ty?
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Related Book For 
Public Finance In Canada
ISBN: 9781259030772
5th Canadian Edition
Authors: Harvey S. Rosen, Ted Gayer, Jean-Francois Wen, Tracy Snoddon
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