Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 13 Incorrect Marked out of 1.00 if Flag question Consider the following two-person (1 and 2) two-good (X and Y) economy. The utility of

image text in transcribed
image text in transcribed
Question 13 Incorrect Marked out of 1.00 if\" Flag question Consider the following two-person (1 and 2) two-good (X and Y) economy. The utility of person i is given by | ] Uri = bixgl yiz where xi and vi denote respectively person i's the consumption amount of good X and good Y, i=1, 2. The value of parameter bi is b1 = 4 for person 1 and 132 = 1 for person 2. Person 1's income is M1 = 1050 and person 2's income is M2 = 1830 dollars. The price of good X and price of good Y are given respectively by px =10 and py = 10. Suppose the government imposes a uniform sales tax equal to 13% only on the person with the greater income (and if their incomes are equal, imposes this sales tax only on person 2) and gives the proceeds to the other person. Determine the efficiency loss due to this "redistribution scheme" and then enter the value of the "efficiency loss\" below. Answer: -35.685 8 The correct answer is: 0.00000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

E Marketing

Authors: Raymond Frost

7th Edition INTERNATIONAL EDITION

0132953443, 978-0132953443

More Books

Students also viewed these Economics questions

Question

Explain Boyles law in terms of the kinetic theory.

Answered: 1 week ago