Question 3. Assume that there are two goods. The price of the first good is $10, the price of the second good is $5. The income is m=200. For the following read section 2.6. In all the cases below determine the equation of the new budget line, the intercepts, and the slope (always starting from the initial level of prices and income given above). · The government imposes a quantity tax of 2 Dollars on good 1; · The government imposes a value tax of 20% on good 1. · The government pays a quantity subsidy of 1 Dollar on good 1. · The government pays a lump sum subsidy of 40 Dollars.

Question 3. Assume that there are two goods. The price of the first good is $10, the price of the second good is $5. The income is m=200. For the following read section 2.6. In all the cases below determine the equation of the new budget line, the intercepts, and the slope (always starting from the initial level of prices and income given above). · The government imposes a quantity tax of 2 Dollars on good 1; · The government imposes a value tax of 20% on good 1. · The government pays a quantity subsidy of 1 Dollar on good 1. · The government pays a lump sum subsidy of 40 Dollars.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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