Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cameron works for the Department of Tax Revenue.All the citizens who pay taxes to Cameron's Department have the same utility function, U(x,y) = x+y and

Cameron works for the Department of Tax Revenue.All the citizens who pay taxes to Cameron's Department have the same utility function, U(x,y) = x+yand the same budget of $10.00.Good xhas a per unit price of $0.95, whereas Good yhas a per unit price of $1.00.Cameron has estimated that imposing a tax of $0.10 per unit on Good xwas raise $1.05 per citizen.Cameron is mistaken.Calculate the difference in the actual amount of revenue per citizen that the tax will raise for the Department of Tax Revenue versus Cameron's estimate.Note that the amount of revenue per citizen can be calculated as 0.10x*.Your answer should be in cents ($0.XX for example).

Please explain your work and the steps you took!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economics of Money, Banking and Financial Markets

Authors: Frederic S. Mishkin

9th Edition

978-0321607751, 9780321599797, 321607759, 0321599799, 978-0321598905

More Books

Students also viewed these Economics questions