Assume an economy with two goods, x and y. A consumer has preferences u(x, y) =...

 

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Assume an economy with two goods, x and y. A consumer has preferences u(x, y) = xy, = xy, (MUx (MUx = y, MU = x). Prices are px=1 and py=1. The consumer has an income of M=150.0. Suppose that the price of good x increases to px'=4 and that this is due to a tax of 3 per unit of good sold. Calculate the compensating variation (CV) and the tax revenue. What is the difference CV-Tax? No units, no rounding. Assume an economy with two goods, x and y. A consumer has preferences u(x, y) = xy, = xy, (MUx (MUx = y, MU = x). Prices are px=1 and py=1. The consumer has an income of M=150.0. Suppose that the price of good x increases to px'=4 and that this is due to a tax of 3 per unit of good sold. Calculate the compensating variation (CV) and the tax revenue. What is the difference CV-Tax? No units, no rounding.