Can you please assist? I attempted by need some help as I am not sure of my answer. Consider Tasmanian households that have a utility function given by = 107015 where is kilowatt-hours (kWh) of electricity and is dollars of spending on all other goods per year. Assume household annual disposable income is and the price of electricity per kWh is .

a. Show that the Marginal Rate of Substitution (MRS) of a kWh of electricity in terms of $ of all other goods is equal to 15/.

b. Show that household demand function for , kWh of electricity per year, is

= /16

c. Suppose that the price of electricity is $0.25/kWh. Joachim has an annual disposable income of $56,000. How much electricity does Joachim use? How much does he spend on electricity and how much on other goods?

d Suppose the government introduces a subsidy of $0.05/kWh. How much electricity does Joachim use after the subsidy? How much does the subsidy to Joachim cost the government?

e. If Joachim was instead given a lumpsum subsidy equivalent to the cost of the $0.05/kWh subsidy, how much electricity would Joachim use? Use Joachim's utility function to explain which scheme Joachim prefers.

f. Calculate the size of the income and substitution effect for the $0.05/kWh subsidy and the lump-sum subsidy. Why does the $0.05/kWh subsidy encourage more electricity use than the lumpsum subsidy?