Connect 1-semester Access Card For Microeconomics
2nd Edition
ISBN: 9780077491697
Author: Whinston, Michael, BERNHEIM, B. Douglas
Publisher: McGraw-Hill Education
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Question
Chapter 6, Problem 4P
(a)
To determine
Graphically illustrate the demand curve and determine the change in
(b)
To determine
Determine the amount of government revenue from the tax.
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Students have asked these similar questions
The utility function of a consumer is u = √x + 2y.
(a) Show mathematically that the rise of Px will decrease demand for x goods.
(b) Demonstrate mathematically that an increase in Px will increase demand for goods y.
(c) If currently the price of goods is four times more expensive than the price of goods x and the government wants to set a tax that results in the increase in Px′ = 1.1Px, what are the units of decrease in the number of x items requested?
In consumer theory economics, what is the difference between a necessity and a luxury good. What is the likely difference in the tax revenue obtained from a tax imposed on a necessity versus a luxury good? Explain and illustrate with appropriate figures.
1. John consumes good X and good Y.
His expenditure function is
E=2U(PX)^5(PY)^5.
His demand for goods X and Y are given by X=I/(2 PX), Y= I/(2 PY)
Suppose that initial PX=1 and PY=1. John's income is 12.
a. Find John's initial level of utility.
b. Suppose the government announces plans to introduce a tax of 3 per unit on good X. Find an exact expression for the amount of income John would be just willing to give up to avoid the tax on good X.
c. Suppose the government implements the tax. How does John's consumption of good X change? Find the income and substitution effects (with regards to good X) associated with the tax increase.
Chapter 6 Solutions
Connect 1-semester Access Card For Microeconomics
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