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Suppose that the consumer has an income m = 60, and that the prices for goods 1 and 2 are px = 2 and py
Suppose that the consumer has an income m = 60, and that the prices for goods 1 and 2 are px = 2 and py = 3 respectively.
A tax of 100% per unit of both goods 1 and 2 consumed is imposed. (a) Write down the budget line for the consumer (b) Graph the budget line for the consumer (c) Identify the optimal consumption bundle for the consumer given their budget constraint; you may do so graphically or analytically.
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