Suppose that the consumer has income z=10 and the prices of good x, y, are respectively px = 1, py = 4. The utility function is: U = xy.

a) Calculate the Equivalent Variation due to the introduction of the excise tax t=3 on good x (new price is px+t).

b) Calculate the DWL or Excess Burden of the tax using the concept of EV.

c) What would be the advantage of using a lump-sum tax rather than the excise tax t?