Consider 2 goods with prices p1 = 4 and p2 = 6, and a consumer with income m = 200. The government imposes a sales tax on good 1. Suppose the sales tax is (a) a quantity tax t = 2 (dollars per unit). (b) an ad valorem tax of 30 per cent (t = 0.3). Compute and graph the consumer’s budget line without a tax, and for the taxes in (a) and (b), respectively.

Q: My utility over goods 1 and 2 is given by: u(x1,x2)=min{x1/a,x2/b} Where x1is the quantity of…

A: Individuals and organizations strive for the highest amount of enjoyment from their economic…

Q: A consumer of two goods, good 1 and 2, has a utility function U (X1, X2)= X1 0,6. X2 0,4, where x,…

A: Given information X1^0.6X2^0.4 P1=5 P2=3 M=150 Now price of X1 decreases  New P1=2

Q: 5. Assume Mark's utility function is given by u(x1, x2) = x1x2. The prices of goods 1 and 2 are p₁…

A: Budget constraints shows the relationship between the price of two goods, their quantities and the…

Q: given f(x,y) = 9x2 - 2xy + 8y2, and Px= 12, Py= 1 and income, I = 165. Construct the budget…

A:

Q: For the following pair of parameter and choice variable indicate whether the relationship is…

A: A positive relationship between parameter and choice variable exists when they both move in the same…

Q: 14) If the expenditures of Salih are equal to his income, it means that he is consuming at a point…

A: A budget line shows the combination of two goods that a consumer can purchase with the given level…

Q: 19. If people consume less of a good when their income increases, it is call a) a subsidy b) a…

A: Income elasticity of demand refers to the responsiveness of the quantity demanded of a command to…

Q: Utility function of a consumer for playing football every week is given as U(t) = 11t-2t^2 where t…

A: When t increases and Marginal Utility decreases, Therefore, dMU/dt => -4 < 0, Thus as per…

Q: 1. Consider an individual who consumes two goods, x and y. Her utility function is U(x, y) =…

A: In the context of economics and decision theory, a utility function is a mathematical depiction of a…

Q: Suppose the price of Pizza is $10 the price of cola is $1, and the consumer's income is $60. In…

A: The budget line is a straight line that represents a different combination of two goods a consumer…

Q: If the consumer's income decreases to l'=100, then the budget line wi✔ shift inward (parallel to the…

A: Budget line shows the relationship between the two goods, their prices and the income of consumer.…

Q: a consumer of two goods, either 1 or 2, has a utility function u (X1, X2) = X1 0.6. X2 0.4, where X1…

A: A consumer maximizes utility by consuming a bundle where slope of indifference curve is equal to…

Q: consumer prefers to consume 1 unit of x with each unit of y. if the price of x is $12 and the price…

A: Given that the consumer prefer to consume one unit of good x with each unit of good y. This implies…

Q: s utility function is U=X+ 25XZ + Z. Let the price of good X be px, the price of good Z be…

A: Given utility function- U= X+25XZ+Z

Q: 1. Determine the effect of the subsidy on the consumer's budget constraint 2. Graph the original and…

A: Budget constraints recreate the different combinations of goods that a consumer can purchase.…

Q: Question 1: The city of Denver is concerned with its citizens' consumption of craft beer. They (the…

A: A budget line is a line that shows all the possible combinations of two goods that a consumer can…

Q: (20 points) A person has utility function U = X0.270.8 for goods X and Z at prices Px = $20 and Pz =…

A: Approach to solving the question: Detailed explanation: Examples: Key references:

Q: Question 5 My utility over goods 1 and 2 is given by: u (21, 22) = min { } Where is the quantity of…

A: Here we have to study about the Utility Maximization.Individuals and organizations strive for the…

Q: A consumer consumes two goods: wraps and tea, with respective quantities x1 and x2. Suppose the…

A: Indifference curve is the curve in which satisfaction of consumer on different combination is…

Q: PROBLEMS/SITUATIONS: 1. Assume you spend your entire income on two goods X & Y with prices given as…

A: A consumer's Hicksian demand function or compensated demand function for a good is the quantity…

Q: Jonathan spends his income (M) on good X and Y. His preferences are represented by the utility…

A: In question 9 we have:- Jonathan spends his income (M) on good X and Y. The price of good Y is 1 and…

Q: Stuart's utility function for goods X and Y is represented as U(X,Y)=X0.8Y0.2. Assume that his…

A: we have Utility function=U(X,Y)=X0.8Y0.2     and Budget =$100=20x + 10y marginal utility of good…

Q: Please indicate the correct answer I am a bit confused

A: The slope of the budget line is equal to the negative of the ratio between the price of good on…

Q: Suppose a consumer's income elasticities are constant and equal across all goods. (5) (a) What is…

A: 5)  Income elasticity of demand is the responsiveness of the quantity demanded to the change in…

Q: 8. Suppose U = xx* and our budget is given as p₁x₁+P2x2 = m, where m is our income. Solve for solve…

A: Budget constraints shows the relationship between the two goods , their prices and the income of…

Q: Let E be the amount in dollars that Carlos spends on salad and pizza. If Carlos buys S bowls of…

A: There is a person named Carlos, buying salald and pizza.  A bowl of salad cost $4, and a slice of…

Q: Supose that a consumer has utility function U with U(₁,₂)= 14126, where ₁ and 2 are demand of…

A: Utility function : U  = x10.4 x20.6Price of x1 =  3Price of x2 =  5 Income of individual =  12Budget…

Q: For two goods that I consume and I like both of them, say hamburger and Ice Latte, if hamburger is…

A: A uniform ad valorem sales tax is a type of tax that is levied on a product or service as a…

Q: 05- Income and Substitution Effects Question 1

A: The X-intercept of the budget line for the consumer in this situation is 12 unitsExplanation:given…

Q: A basket of goods for a given consumer includes two goods, X and Z. Consumer income is equal to…

A: Budget constraint: given the price of 2 goods and consumer’s income. The budget constraint shows…

Q: draw the budget constraint for a person with income of $ 1000 if the price of pepsi is $5 and the…

A: A budget constraint is a term used in economics to describe all of the different combinations of…

Q: Given the following budget line ???+???=?  And that the slope of the budget line depends only on…

A: Budget Line : A Budget line is a line which shows all the different combinations of the two goods…

Q: If the quantity of good A (QA) is plotted along the horizontal axis, the quantity of good B (QB) is…

A: There are two goods: good A and good B. The quantity of good A is measured on horizontal axis. The…

Q: Question 6: Suppose Connie has preferences over bread (good 1) and butter (good 2) 1/2 1/2 U (q1,…

A: The microeconomic theory of utility maximization states how consumer chooses his consumption bundle…

Q: Consider a consumer who consumes two good- X and Y - where X is an inferior (but NOT Giffen good.…

A: The price effect is defined as the change in the quantity demanded of a commodity due to a change in…

Q: Consider a consumer who must allocate their available income between the consumption of two goods,…

A: Marginal utility refers to the additional utility derived from the consumption of one more unit of…

Q: Suppose the demand function for a product is given by the function: D(g) 0.017q+68 Find the…

A: Disclaimer- “Since you have asked multiple question, we will solve the first question for you as per…

Q: (Figure: Water and Electricity) Refer to the figure. Using the solid budget (black) constraint in…

A: Budget Constraint:Budget constraint refers to a limitation on the combinations of goods or services…

Q: Suppose that a consumer had a budget of $36 to spend on Good X and Good Y. The price of Good X is $4…

A: The income effect measures how a change in the price of a good affects the real purchasing power or…

Q: 2) Suppose you have $400 that you can spend on goods 1 & 2. If the price of good 1 is $40, while the…

A: The economics as a study focuses on the use of the resources which are available with each society.…

Q: Given f(x,y) = 2x2 - 5xy + 5y2,   and Px= 7, Py= 6 and income, I = 169.   Construct the budget…

A: Note: “Since you have posted a question with multiple subparts, we will solve the first three…

Q: 0.5 0.5 Suppose a consumer with a utility function U(x,y) =x the kilo and that their prices are…

A:

Q: 6. If the demand equation is L=100-10r find the consumer's surplus when the consumer purchases 8…

A: Given data: Q=100-10P Purchasing unit is 8

Q: A consumer has to choose the optimal amount of cheese and crackers to purchase. He or she has drawn…

A: The budget constraint shows all the combinations of the items and services that can be purchased by…

Q: A consumer of two goods, either 1 or 2, has a utility function U (X1, X2) = x1 0,6.x2 0.4, where x…

A: Substitution effect says that decrease in price of the good should increase its quantity demanded.