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Consider a consumer whose utility is given by u(x, y) = x + y. She spends her income, given by I=10, on two consumption goods,
Consider a consumer whose utility is given by u(x, y) = x + y. She
spends her income, given by I=10, on two consumption goods, x and y,
the prices of which are given, respectively, by px= 2 and py=1 . The
government is levying a (per-unit) tax on y, denoted by t. Characterize
the excess burden as a function of t.
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