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
icon
Related questions
Question

Solve this economic

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:
Transcribed Image Text: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:
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Taxes And Efficiency
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education