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Pam is rich and at this high income level, her demand for good X is independent of income and given by X*=125- 5 px/py where
Pam is rich and at this high income level, her demand for good X is independent of income and given by X*=125- 5 px/py where px and py denote respectively the price of good X and the price of good Y. Suppose the government imposes a "consumption" per-unit tax t=3.4 on good X. Assume that the price of good Y is equal to 4 and the sellers of good X charge a price 2.2 before and after this tax is imposed. Carry out the calculations required to find the maximum amount Pam would be willing to pay to avoid this tax. Then enter the value of this amount below
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