Jared has a demand for good X that has the following form: = 100 2 + 0.5, where is the price of X and I is Jared's income. Suppose initially price of good X is 40$ and Jared's income is 100$.

For funding a public project governments needs to impose taxation, and each citizen's contribution would be 19$. There are two options: a Lump-sum tax or a unit (excise) tax.

a. How much the unit tax should be to gather equal amount of revenue as lump-sum tax?

b. Compare the two options and recommend the better choice from Jared's perspective. Calculate and explain why. Use Graph to support your recommendation.