Suppose the following model of government efficiency. Utility function over consumption of private goods (C) and public goods (G) is such that this country desires to have 3 units of consumption good per each unit of public good. Exogenous Income: Y = 18 Lump-sum tax: T Government efficiency: q = 0.2 (This measures the number of public goods that can be produced from one unit of private consumption good) If we want to maximize the representative consumer's utility and balance the government budget, what is the optimal lump-sum tax? O A. 3.375 O B. 2.25 OC. 16.875 O D. 11.25 O E. none of the above

Suppose the following model of government efficiency. Utility function over consumption of private goods (C) and public goods (G) is such that this country desires to have 3 units of consumption good per each unit of public good. Exogenous Income: Y = 18 Lump-sum tax: T Government efficiency: q = 0.2 (This measures the number of public goods that can be produced from one unit of private consumption good) If we want to maximize the representative consumer's utility and balance the government budget, what is the optimal lump-sum tax? O A. 3.375 O B. 2.25 OC. 16.875 O D. 11.25 O E. none of the above

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Frontiers Of Microeconomics

Section22.2: Political Economy

Problem 2QQ

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