The government must increase its tax revenues to cover the higher federal deficit. It imposesa sales tax of $5 on salad. Tom is vegetarian and always eats a salad (s) with 2 glasses of green juice (g). His utility for the two goods is therefore\[ u(s, g) = \min \left\{ s, \frac{1}{2}g \right\} \]This expression describes Tom's utility function, indicating he perceives his satisfaction or utility from salads and green juice based on a fixed consumption ratio. Tom achieves maximum satisfaction when the number of salads is equal to half the number of glasses of green juice. The utility function takes the minimum of the two terms, ensuring balance according to his consumption pattern. Tom’s utility level after the introduction of the tax is:(a) 1 (b) 8 (c) 7 (d) 4 (e) 10 **Explanation:** The correct answer is (c) 7, as it is highlighted in bold. There are no graphs or diagrams present in the image.

Utility function : u = min { s , 0.5g } Where , s : salad & g : Juice Utility…

Answered: Tom is vegetarian and always eat a…

Tom is vegetarian and always eat a salad (s) with 2 glasses of green juice (g). His utility for the two goods is therefore

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question

The government must increase its tax revenues to cover the higher federal deficit. It imposes
a sales tax of $5 on salad.

Tom is vegetarian and always eats a salad (s) with 2 glasses of green juice (g). His utility for the two goods is therefore

\[ u(s, g) = \min \left\{ s, \frac{1}{2}g \right\} \]

This expression describes Tom's utility function, indicating he perceives his satisfaction or utility from salads and green juice based on a fixed consumption ratio. Tom achieves maximum satisfaction when the number of salads is equal to half the number of glasses of green juice. The utility function takes the minimum of the two terms, ensuring balance according to his consumption pattern.

Tom’s utility level after the introduction of the tax is:

(a) 1
(b) 8
(c) 7
(d) 4
(e) 10

**Explanation:** The correct answer is (c) 7, as it is highlighted in bold. There are no graphs or diagrams present in the image.

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