Suppose that the original budget constraint is p 1 x 1 +p 2 x 2 =m. a. What is the budget constraint if we tax the consumption of good 1 at a rate of t quantity tax? b. What would be the form of this budget constraint if we consider an income tax that raises the same amount of revenue?

/in /by

Suppose that the original budget constraint is p 1 x 1 +p 2 x 2 =m.
a. What is the budget constraint if we tax the consumption of good 1 at a rate of t
quantity tax?
b. What would be the form of this budget constraint if we consider an income tax that
raises the same amount of revenue?

You might also like
The demand and supply functions of a good are given by QD = 24 − 3P; QS = 4 + 2P where P, QD and QS denote price, quantity demanded and quantity supplied, respectively. Find the inverse demand and supply functions and the market equilibrium price and quantity.
his assignment covers Demand Theory and Consumer Choice. Please carefully read the instructions and follow them well! I have attached the class slides and this is the E-book https://b-ok.cc/book/5005419/fdb20a
"What is the point of entering a perfectly competitive industry if it is simply to earn zero profits anyway?" Discuss this statement with reference to the long and short run, as well as to heterogeneity across firms.
The South African government depends on the South African Revenues Services (SARS) for the collection of tax revenue for the ever increasing public expenditure. COVID-19 made all government sof the world over to resort to lockdowns to curb the spread of the disease. The lockdowns have a direct effect of reducing business activities and hence, decrease in revenue collections. Citizens willingness to pay tax largely depends on the perceptions the public have on the tax system, Critically discuss any 7 requirements of a good tax system.
When the price of erasers increases from R1,50 to R2,50, the quantity demanded of pencils is unchanged. The cross elasticity of demand between erasers and pencils is _____because erasers and pencils ___ A. 0; are normal goods B. 0,5; are complements C. 0; are unrelated D. 1; are substitutes
Suppose production of a particular good requires equal parts labor and capital. Also suppose that both labor and capital are increased from 40 to 100 units per week. If output increases from 250 to 500 units per week, this production facility is experiencing increasing returns to scale. constant returns to scale. decreasing returns to scale. Returns to scale cannot be determined from the information given.
Suppose for a commodity X, demand and supply curves are given by the equations (1) Qd = 5/P (2) Qs = -4+P What is the equilibrium price? What is the equilibrium quantity?
Discuss the income and substitution effects of a price change in case of a normal good.