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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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)?
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