EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 21, Problem 4RQ
To determine
Which redistribution of income is correct.
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What happens to the budget line if the government applies a specific tax of $1 per
gallon of gasoline but does not tax other goods (assuming that the consumer will
still buy more than 10 gallons per week)? What happens to the budget line if the
tax applies only to purchases of gasoline in excess of 10 gallons per week?
1.) Use the line drawing tool to draw a new budget constraint with the gasoline tax
on all gallons of gasoline. Label this line "L2.
2.) Use the multipoint curve drawing tool to draw the new budget constraint when
the gasoline tax applies only to purchase of gasoline in excess of 10 gallons per
week. Label this line L. (Note: Be sure to draw the entire budget constraint,
starting at a quantity of 0).
Carefully follow the instructions above, and only draw the required objects.
10
Gasoline, Gallons per week
After plotting the final point of your multipoint curve, press the Esc key on your
keyboard to end the line.
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What happens to the budget line if the government applies a specific tax of $1 per
gallon of gasoline but does not tax other goods (assuming that the consumer will
still buy more than 10 gallons per week)? What happens to the budget line if the
tax applies only to purchases of gasoline in excess of 10 gallons per week?
1.) Use the line drawing tool to draw a new budget constraint with the gasoline tax
on all gallons of gasoline. Label this line "L2.
2.) Use the multipoint curve drawing tool to draw the new budget constraint when
the gasoline tax applies only to purchase of gasoline in excess of 10 gallons per
week. Label this line 'L. (Note: Be sure to draw the entire budget constraint,
starting at a quantity of 0).
Carefully follow the instructions above, and only draw the required objects.
10
Gasoline, Gallons per week
After plotting the final point of your multipoint curve, press the Esc key on your
keyboard to end the line.
étv
MacBook Air
80
DII
DD
esc
F1
F2
F3
F4
F6
F7
F8
F9
!
@…
Suppose that the last dollar that Victoria receives as income brings her a marginal utility of 10 utils while the last dollar that Fredrick receives as income brings him a marginal utility of 15 utils. If our goal is to maximize the combined total utility of Victoria and Fredrick, we should: a. Redistribute income from Victoria to Fredrick. b. Redistribute income from Fredrick to Victoria. c. Not engage in any redistribution because the current situation already maximizes total utility. d. None of the above.
Chapter 21 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
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