Jenny has a utility function U(x, y) = 2xy + 1. The price of x is $1 and the price of y is $1, and her income is $20. A. How much x and y does Jenny demand? B. A tax is placed on x so that x now costs Jenny $2 while her income and the price of y stay the same. How much of good x does she now demand? C. Would Jenny be as well off as she was before the tax if when the tax was imposed, her income rose by an amount equal to $1 times the answer to part (b)?

Jenny has a utility function U(x, y) = 2xy + 1. The price of x is $1 and the price of y is $1, and her income is $20. A. How much x and y does Jenny demand? B. A tax is placed on x so that x now costs Jenny $2 while her income and the price of y stay the same. How much of good x does she now demand? C. Would Jenny be as well off as she was before the tax if when the tax was imposed, her income rose by an amount equal to $1 times the answer to part (b)?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 15PAE

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