John's monthly demand (in number of pints) for walls ice cream is given by Q = 6
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Question:
John's monthly demand (in number of pints) for walls ice cream is given by Q = 6 + (I - T)/5000 - P/3. where I is John's monthly income, T is his monthly income tax expense and P is the price of a pint of walls. Suppose the price of a pint of walls ice cream is $9, John's monthly income is $10,000, and his monthly income tax expense is $5,000. Now suppose his monthly income tax expense is increased by 10%.
a) Calculate the percentage change in John's walls ice cream consumption resulting from the tax increase.
b) Calculate the change in John's consumer surplus from consuming walls ice cream resulting from the tax increase
Related Book For
Microeconomics
ISBN: 9781464146978
1st Edition
Authors: Austan Goolsbee, Steven Levitt, Chad Syverson
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