=+B. Suppose that your tastes could be represented by the utility function u1x1

,x2 2 5 10x1 0.5 1 x2

, with x1 representing weekly servings of grits and x2 representing dollars of other breakfast food consumption.

Suppose your weekly (exogenous) budget for breakfast food is $50.

a. Derive your uncompensated and compensated demand for grits.

b. Suppose the tax on grits raises its price from $1.00 to $1.25 per serving. How does your consumption of grits change?

c. How much tax revenue T does the government collect from you per week?

d. Use the expenditure function for this problem to determine how much L you would have been willing to pay (per week) to avoid this tax?