Question
Anna has the following data x1 = the quantity of pizzas, measured in slices per month p1 = the price of pizza in $ per
Anna has the following data
x1 = the quantity of pizzas, measured in slices per month
p1 = the price of pizza in $ per slice = $8 / pizza
x2 = the quantity of apples, measured in pounds per month p2 = the price of apples in $ per pound = $2 / pound
m = income = $50 / month //Suppose that the government places a value (ad valorem) subsidy of 12% on purchases of pizza, and it places a quantity tax of $0.16 per pound on apples. Suppose that the government also places a value (ad valorem) income tax of 15% on all individuals in Anna's income category
Q: What is the new formula of her budget constraint?
//Rosa consumes only pears and bananas. The cost of pears is 30 pesos each and the cost of bananas is 15 pesos each. Her income is 180 pesos.
Q: What is the maximum amount of pears & bananas that she can buy?
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