Jim's utility is given by u(1, T2) = (4x7 + 25x2) /2 . Suppose p1 = 2, p2 = 4, and I = 60 a.
Jim's utility is given by u(1, T2) = (4x7 + 25x2) /2 . Suppose p1 = 2, p2 = 4, and I = 60 a. (6pts) How much of x1 and x2 does Jim consume? b. (6pts) Suppose a tax was placed on x2 of 2 dollars per unit of x2. How much would the government make in tax revenue? c. (4pts) What is the most Jim would pay to keep price of x2 at 4? d. (4pts) What is the deadweight loss associated with the tax? True False
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