Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 5.2, Problem 1ST
To determine
The impact of subsidy on the
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Jack has a utility function U(x1x2)=2(x1)(x2)^2 , and the price of x1 is 3$ and the price of x2 is $1 and Jack has an income of $90. a) How much of each good will he demand? Let’s now consider the case where the government imposes quantity tax which is a tax on the amount of a good consumed. b) A 1$ quantity tax (t) is placed on x1 so that now x1 costs $4 to Jack while his income and the price of x2 stay the same. How much of good x1 and x2 does he now demand? c) What will be the tax revenue of government? In other words, tax revenue is the amount equal to tax (t, which is 1$ here) times the quantity demanded by Jack (the answer of optimum x1 in part (B))? Government decided to give back all of the quantity tax revenue to Jack. In other words, his income rose by an amount equal to collected tax revenue in part (c). d) How much of good x1 and x2 does he demand now? (x1 still costs to Jack $4 but his income increased) e) Would Jack be as better off as he was before the quantity…
If a good is an "inferior good", then
people feel inferior when they buy it
people buy less of this good when their income increases
people buy more of this good when their income increases
the demand curve for this good is inferior to the demand curve of other goods
If the demand for widgets is Qd = 90 - Pd and the supply of widgets is Q, = Ps - 30, what is the total
surplus created at the equilibrium price? Also, draw the diagram and shade the appropriate area of
the diagram.
Chapter 5 Solutions
Microeconomics
Ch. 5.1 - Prob. 1STCh. 5.1 - Prob. 2STCh. 5.2 - Prob. 1STCh. 5.2 - Prob. 2STCh. 5.3 - Suppose college students are given two options....Ch. 5.3 - Prob. 2STCh. 5.4 - Prob. 1STCh. 5.4 - Prob. 2STCh. 5.5 - Prob. 1STCh. 5.5 - Prob. 2ST
Ch. 5.6 - Give an example to illustrate that someone may pay...Ch. 5.6 - Prob. 2STCh. 5.7 - Prob. 1STCh. 5.7 - Prob. 2STCh. 5.8 - Prob. 1STCh. 5.8 - Prob. 2STCh. 5.9 - Prob. 1STCh. 5.9 - Prob. 2STCh. 5.10 - Prob. 1STCh. 5.10 - Prob. 2STCh. 5.11 - Prob. 1STCh. 5.11 - Prob. 2STCh. 5.12 - Prob. 1STCh. 5.12 - Prob. 2STCh. 5 - Prob. 1QPCh. 5 - Prob. 2QPCh. 5 - Prob. 3QPCh. 5 - Prob. 4QPCh. 5 - Prob. 5QPCh. 5 - Prob. 6QPCh. 5 - Prob. 7QPCh. 5 - Prob. 8QPCh. 5 - Prob. 9QPCh. 5 - Prob. 10QPCh. 5 - Prob. 11QPCh. 5 - Prob. 12QPCh. 5 - Prob. 13QPCh. 5 - Prob. 14QPCh. 5 - Prob. 15QPCh. 5 - Prob. 16QPCh. 5 - Prob. 1WNGCh. 5 - Prob. 2WNGCh. 5 - Prob. 3WNGCh. 5 - Prob. 4WNGCh. 5 - Prob. 5WNGCh. 5 - Prob. 6WNG
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