The government wishes for Alonso to buy fewer sport cars because they create too much pollution. The government decides to place a tax on the price of sport cars. How large does 7 need to be so that Alonso buys half of his original number of sport cars? What is Alonso's new utility under the tax? T= 2, V = 450 T= 2, V = 400 T = 1.5, V = 350 T = 1, V = 500
The government wishes for Alonso to buy fewer sport cars because they create too much pollution. The government decides to place a tax on the price of sport cars. How large does 7 need to be so that Alonso buys half of his original number of sport cars? What is Alonso's new utility under the tax? T= 2, V = 450 T= 2, V = 400 T = 1.5, V = 350 T = 1, V = 500
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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IMPORTANT: Pc=2 , Pp=4 , I=80
![The government wishes for Alonso to buy fewer sport cars because they create too much pollution.
The government decides to place a tax 7 on the price of sport cars. How large does T need to be so
that Alonso buys half of his original number of sport cars? What is Alonso's new utility under the
tax?
O T = 2, V = 450
OT=2, V = 400
O T = 1.5, V = 350
OT=1, V = 500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8b686a53-4fe9-4179-9a2d-0237054b121e%2Fc0834a29-a385-4824-820b-0abd76cca6e5%2F7ylkt9k_processed.png&w=3840&q=75)
Transcribed Image Text:The government wishes for Alonso to buy fewer sport cars because they create too much pollution.
The government decides to place a tax 7 on the price of sport cars. How large does T need to be so
that Alonso buys half of his original number of sport cars? What is Alonso's new utility under the
tax?
O T = 2, V = 450
OT=2, V = 400
O T = 1.5, V = 350
OT=1, V = 500
![Alonso has preferences for sport cars (C) and paella (P) given by the utility function
U(C, P) =
= 4CP. The prices for C and P are, respectively, pc and pp. In what
follows, do not worry if the results are not integers.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8b686a53-4fe9-4179-9a2d-0237054b121e%2Fc0834a29-a385-4824-820b-0abd76cca6e5%2Fot3r14v_processed.png&w=3840&q=75)
Transcribed Image Text:Alonso has preferences for sport cars (C) and paella (P) given by the utility function
U(C, P) =
= 4CP. The prices for C and P are, respectively, pc and pp. In what
follows, do not worry if the results are not integers.
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