Consider an individual making a choice over two goods , x and y with prices Px=2 and Py=1 with income=100

A) If the individual has the utility function u(x,y)= 3x+y, what would the total, income, substitution effect of a price of x increase to 5?

B) If the individual has the utility function u(x,y)= x+y, what would the total, income, substitution effect of a price of x increase to 0.5?

C) Suppose an individual has utility function u(x,y)=xy and you know that this yields the demand function x*=I/3px and y*=2I/3py ( no need to calculate). You also remember that MRS= px/py all prices.If the government wishes to reduce consumption of x through either a sales tax of $3 or a lump-sum (income) tax for initial prices Px=2 and Py=2 , find the sales tax revenue, the equivalent income tax and show that income tax involves a higher utility.