Hasmi has an income of $100. a. Draw their budget constraint when the price of Ais $1and the price of Bis \$2. (Put quantity of Bon the vertical axis.) b. The government decides to tax Hasmi's income by 20%while subsidizing the price of B by 50%. On the same graph, draw Hasmi's new budget constraint. c. Based on your graph above, explain briefly whether it is possible that the amount of tax revenues the government receives from Hasmi can equal the total amount paid in subsidies for Hasmi's consumption of B.
Hasmi has an income of $100. a. Draw their budget constraint when the price of Ais $1and the price of Bis \$2. (Put quantity of Bon the vertical axis.) b. The government decides to tax Hasmi's income by 20%while subsidizing the price of B by 50%. On the same graph, draw Hasmi's new budget constraint. c. Based on your graph above, explain briefly whether it is possible that the amount of tax revenues the government receives from Hasmi can equal the total amount paid in subsidies for Hasmi's consumption of B.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Hasmi has an income of $100. a. Draw their budget constraint when the price of
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