08 Jun Question Suppose preferences are characte
Question
Suppose preferences are characterized by the utility function u(x1, x2) = x1x22. As usual, the budget constraint is p1x1 + p2x2 = m. To be concrete, suppose p1 = p2 = 10 and m = $90.
3.1 [10 points] Now suppose the government places a 50% tax on x1.Write the new budget constraint, given this tax. Identify the utility maximizing bundle of x1 and x2 for Alice, the amount of tax revenue collected by the government, and calculate Alice’s utility. Ignore second-order conditions.
3.2 [10 points] Now suppose instead the government places a 20% taxon x2. Once again, write the new budget constraint, given this tax.Identify the utility maximizing bundle of x1 and x2 for Alice, theamount of tax revenue collected by the government, and calculateAlice’s utility. Ignore second-order conditions.
3.3 [10 points] In light of your answers to [3.1] and [3.2], wh
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.