Question: A consumer has the utility function U(X,Y)= X0.4 y0.6. Her income is $100000 and she faces prices Px=5 and Py=10. Would this consumer prefer

A consumer has the utility function U(X,Y)= X0.4 y0.6. Her income is

A consumer has the utility function U(X,Y)= X0.4 y0.6. Her income is $100000 and she faces prices Px=5 and Py=10. Would this consumer prefer to be taxed on good Y at $2 per unit or a revenue equivalent income tax? Graphically illustrate your answer.

Step by Step Solution

★★★★★

3.50 Rating (163 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Step 11 The formul... View full answer

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 Accounting Questions!

You are to write a critically reflective paper entitled: My Role as a Decision Leader in the Global Marketplace. The purpose of this paper is for you to demonstrate your competency in discussing key...

Write an informative report on one of the following topics. 1. What should a U.S. manager know about dealing with workers from ______ [you fill in the country or culture]? What factors do and do not...

You are to write an in-depth essay that critically analyzes a text from a cultural perspective (a film, novel, TV show, etc.). You will be expected to incorporate theories from our course in your...

Suppose Sarah has an endowment of 2 units of X and 4 units of Y and has in-difference curves that satisfy our four basic assumptions (see Chapter 3). Sup-pose Brian has an endowment of 4 units of X...

Consider the problem you face as a student as you determine how much to study for an exam by modeling yourself as a producer of an exam score between 0 and 100. A: Suppose that the marginal payoff to...

Answer all parts of Problem 3.15 for the utility function U = x + 2y. The marginal utilities for x and y are, respectively, MUx = 1/(2x ) and MUy = 1/y . In problem 15 a) Is the assumption that more...

Justin has the utility function U = xy, with the marginal utilities MUx = y and MUy = x. The price of x is 2, the price of y is py, and his income is 40. When he maximizes utility subject to his...

Nickleby has an income of $2,000 this year, and he expects an income of $1,100 next year. He can borrow and lend money at an interest rate of 10%. Consumption goods cost $1 per unit this year and...

Ann's utility function is U(x, y) = x + y, with associated marginal utility functions MUx = 1 and MUy = 1. Ann has income I = 4. a) Determine all optimal baskets given that she faces prices Px = 1...

Consider the utility function: U (X, Y) = ln(X) + B ln (Y) where ln indicates the natural logarithm. a. Calculate MUX, MUY, and MRSXY. b. Compare the formula for MRSXY to the corresponding formula...

9- Write an 8085 program to perform the following multi byte addition operation: Store the result in memory [2802][2801][2800] 91986FH +2E6794H Test the program by manually placing the two 3-byte...

Suppose an 802.11 b station is configured to always reserve the channel with the RTS/CTS sequence. Suppose this station suddenly wants to transmit 1,000 bytes of data, and all other stations are idle...

Find the radius o f convergence, R , o f the series. n = 1 x 5 n n ! R = Find the interval, I, o f convergence o f the series. ( E n t e r your answer using interval notation. ) I =

Refer to the data for Problem 12- 40. Assume the fabric costs $ 4.00 per yard in 2014 and $ 4.10 per yard in 2013. In Problem 12-40, Gable Company manufactures wallets from fabric. In 2013, Gable...

At the end of the current year, $17,555 of fees have been earned but have not been billed to clients. Journalize the adjusting entry to record the accrued fees.

Gable Company manufactures wallets from fabric. In 2013, Gable made 2,160,000 wallets using 1,600,000 yards of fabric. In 2013, Gable has capacity to make 2,448,000 wallets and incurs a cost of $...

For the year ending April 30, Urology Medical Services Co. mistakenly omitted adjusting entries for (1) $1,400 of supplies that were used, (2) unearned revenue of $6,600 that was earned, and (3)...

On January 1, 2014, Dunbar Corporation, an 85%-owned subsidiary of Garfield Industries, received $48,055 for $50,000 of 8%, 5-year bonds it issued when the market rate was 9%. When Garfield...

A " no contest " plea: a. Is only entered in civil actions b. is also known as"Nolo contendre" c. Has exactly the same consequences as a"not guilty " plea d. none of the above

Please answer all the required questions in detail I hope the answer is not copy-paste I hope that the answer will be according to the concepts in the chapter 3 The following article summarizes the...

6 | Consumer Choices Figure 6.1 Investment Choices Higher education is generally viewed as a good investment, if one can afford it, regardless of the state of the economy. (Credit: modification of...

Question 1 0 out of 2.5 points Assume that the price of commodityA is $20, the price of commodity B is $10, and that the consumer is currently spending all available income. At the consumer's current...

Please provide detailed instructions on how each multiple choice answer was solved. Please see attachment. THEORY OF CONSUMER BEHAVIOR What we'll do: Understand the concept of utility and the...

ECO670...... 1. "Deriving the Envelope Thoerem: Consider the more general problem M(o, ) = max, f(x, a, 8) subject to g(r, a, 8) = 0. Show that: dM(a, B) _ Of(x', a, b) ag(x*, a, b) da da da 2. For...

Efficient Taxation of 'Diamond' Goods (Ng, AER, 1987) Consider a consumer who derives utility from three consumption goods: x and y and z, which prices are given, respectively, by x y z p , p and p ....