Calculate dwl or excess burden of tax using concept of ev

Reference no: EM133625993

Problem

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 = √x√y.

1. Calculate the Equivalent Variation due to the introduction of the excise tax t=3 on good x (new price is px+t).
2. Calculate the DWL or Excess Burden of the tax using the concept of EV.
3. What would be the advantage of using a lump-sum tax rather than the excise tax t?

Reference no: EM133625993

Questions Cloud

What is ntarangwis reversed gaze : What is Ntarangwi's reversed gaze? What is Lee's argument about the politics of race in anthropology?

Determine nash equilibrium with a good conclusion : For Wizz Air airlines implement Game Theory with help of payoff matrix in comparison with easy airline airline. Determine nash equilibrium with good conclusion.

Write a function assign_friend_to_coffee_gathering : Write a function assign_friend_to_coffee_gathering: that accepts a string friend; a list of strings time_preferences; and a dictionary of dictionary

What makes this market perfectly competitive : What makes this market perfectly competitive? How do the competitors interact with each other and suppliers and customers?

Calculate dwl or excess burden of tax using concept of ev : Calculate the DWL or Excess Burden of the tax using the concept of EV. What would be the advantage of using a lump-sum tax rather than the excise tax t?

Explain why using a shell script to perform this task : Explain why using a shell script to perform this task would be appropriate. Don't forget to name your sources

Comparing the development of representational symbols : Comparing the development of representational symbols - Find drawings or other two dimensional representations (2D) and compare to objects of the same subject

Type of disaster that is possible in region and community : Describe the event, how you would assist survivors immediately following the event and in the short term (i.e., four weeks) following the disaster.

Compare the views of socrates and hobbes on obedience : Compare the views of Socrates and Hobbes on obedience and disobedience to political authority.

User Account

All Pages