Yam has the following utility function for Apples (X1) and Ice Cream (X2). U(X1,X2) = Min{3X1,X2}. If the prices of Apples and Ice Cream are P1 $1, p2 -$1. Suppose a quantity tax of $1 is imposed on Apples. Which of the following is true after the imposition of the tax? O a. Yam's demand for Ice Cream will not decrease O b. Only Yam's demand for Apple will decreased O c. Yam's demand for both Ice Cream and Apple will decrease O d. The tax will not change Yam's utility
Yam has the following utility function for Apples (X1) and Ice Cream (X2). U(X1,X2) = Min{3X1,X2}. If the prices of Apples and Ice Cream are P1 $1, p2 -$1. Suppose a quantity tax of $1 is imposed on Apples. Which of the following is true after the imposition of the tax? O a. Yam's demand for Ice Cream will not decrease O b. Only Yam's demand for Apple will decreased O c. Yam's demand for both Ice Cream and Apple will decrease O d. The tax will not change Yam's utility
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Yam has the following utility function for Apples (X1) and Ice Cream (X2). U(X1,X2) = Min{3X1,X2). If the prices of Apples and Ice Cream are p1 =$1, p2 -S1.
Suppose a quantity tax of $1 is imposed on Apples. Which of the following is true after the imposition of the tax?
O a. Yam's demand for Ice Cream will not decrease
O b. Only Yam's demand for Apple will decreased
C. Yam's demand for both Ice Cream and Apple will decrease
O d. The tax will not change Yam's utility](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4786cd01-fd3f-40c2-920a-516c0cec469d%2Fb3f678da-b627-44cf-9a5b-31aed107d95e%2Fftz6ikr_processed.png&w=3840&q=75)
Transcribed Image Text:Yam has the following utility function for Apples (X1) and Ice Cream (X2). U(X1,X2) = Min{3X1,X2). If the prices of Apples and Ice Cream are p1 =$1, p2 -S1.
Suppose a quantity tax of $1 is imposed on Apples. Which of the following is true after the imposition of the tax?
O a. Yam's demand for Ice Cream will not decrease
O b. Only Yam's demand for Apple will decreased
C. Yam's demand for both Ice Cream and Apple will decrease
O d. The tax will not change Yam's utility
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