Zara is a utility maximizer interested in two goods, X and Y. Her utility function is given by U=min(2x,4y). Suppose Zara's income is fixed and equal to 712, the price of good X is 4 and the price of good Y is 7. Calculate Zara's excess burden if the government imposes 12% sales tax on good X and 14% sales tax on good Y, assuming the prices sellers charge do not change after the imposition of the sales taxes. (Show your derivations or justify your answer if you submit your handwritten work.) Then enter the value of Zara's excess burden below. Answer:

Zara is a utility maximizer interested in two goods, X and Y. Her utility function is given by U=min(2x,4y). Suppose Zara's income is fixed and equal to 712, the price of good X is 4 and the price of good Y is 7. Calculate Zara's excess burden if the government imposes 12% sales tax on good X and 14% sales tax on good Y, assuming the prices sellers charge do not change after the imposition of the sales taxes. (Show your derivations or justify your answer if you submit your handwritten work.) Then enter the value of Zara's excess burden below. Answer:

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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