Jane spends all of her $200 weekly income on two goods, X and Y. Her utility...

 

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Jane spends all of her $200 weekly income on two goods, X and Y. Her utility function is given by U(X, Y)= 4XY, If the price of X = $8/ unit and the price of Y = $20 a unit, how much of Y should she buy? 2 What is the equilibrium quantity of a market with a demand curve P = 20-Q and a supply curve equal to P = 2 + 2Q and a tax imposed on the seller of $2 per unit? How does this tax affect resource allocation? What might justify the allocation effect of the tax? Draw a graph and show the consumer surplus and producer surplus before and after the tax. Show the share of the tax paid by the buyer and seller respectively. How much is the dead weight loss? Jane spends all of her $200 weekly income on two goods, X and Y. Her utility function is given by U(X, Y)= 4XY, If the price of X = $8/ unit and the price of Y = $20 a unit, how much of Y should she buy? 2 What is the equilibrium quantity of a market with a demand curve P = 20-Q and a supply curve equal to P = 2 + 2Q and a tax imposed on the seller of $2 per unit? How does this tax affect resource allocation? What might justify the allocation effect of the tax? Draw a graph and show the consumer surplus and producer surplus before and after the tax. Show the share of the tax paid by the buyer and seller respectively. How much is the dead weight loss?

Answer rating: 100% (QA)

1 Janes optimal consumption of Y is given by the equation 20 8Y 0 Y 25 2a The equilibrium quantity i... View the full answer