Malia, whose income is 735 per week, consumes only good x and a composite good y ("dollars of other consumption), and her tastes can be represented by the utility function u(x,y) = (x^(1/1))(y). The price of good x is 1 (and the price of good y is 1 by definition). The government imposes a tax that raises the price of good x to 4. Malia will end up paying a total of T=_ per week in tax to the government. (Round your answer to two decimal places.)
Malia, whose income is 735 per week, consumes only good x and a composite good y ("dollars of other consumption), and her tastes can be represented by the utility function u(x,y) = (x^(1/1))(y). The price of good x is 1 (and the price of good y is 1 by definition). The government imposes a tax that raises the price of good x to 4. Malia will end up paying a total of T=_ per week in tax to the government. (Round your answer to two decimal places.)
Chapter6: Demand Relationships Among Goods
Section: Chapter Questions
Problem 6.8P
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Transcribed Image Text:Malia, whose income is 735 per week, consumes only good x and a composite
good y ("dollars of other consumption), and her tastes can be represented by
the utility function u(x,y) = (x^(1/1))(y). The price of good x is 1 (and the price
of good y is 1 by definition). The government imposes a tax that raises the price
of good x to 4. Malia will end up paying a total of T per week in tax to the
government. (Round your answer to two decimal places.)
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