Question
If Ana also have $90 to spend on food every month and face the same prices for junk food ($.5) other food ($1). Suppose that
If Ana also have $90 to spend on food every month and face the same prices for junk food ($.5) other food ($1). Suppose that you cannot observe Ana' utility function, but you observe that each moth She purchase 144 junk food and 18 other food (optimal bundle). In March 2003, in an effort to tackle obesity, the France (where the Ana live), passed a law introducing a 10-cent tax on junk food. Assume that, as a result of the tax, Ana purchase 120 junk food. What is the amount of other food that they purchase? indicate the new optimal bundle in a graph. Are other food a normal or inferior good? Explain. What is the overall amount of the tax paid by Ana? Indicate the tax on a graph.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To find the amount of other food that Ana purchases after the tax on junk food we can use the information provided and set up a system of equations Le...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get StartedRecommended Textbook for
Macroeconomics Principles Applications And Tools
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
7th Edition
978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234
Students also viewed these Economics questions
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
Question
Answered: 1 week ago
View Answer in SolutionInn App