What utility level does the person achieve with the tax

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Reference no: EM13146721

For a person with utility function U=q1q2, and suppose Y=100 and initially p1=p2=2. A tax of $1 is then imposed on good 1 raising its gross price to $3 (the other price remains at $2). Quesions: 1)how much revenue does this tax raise? 2) what utility level does the person achieve with the tax in place? 3)what is the amount of lump-sum tax that attains the utility level in 2), at the initial prices?

Reference no: EM13146721

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