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Economics

Now the following demand function for good 1 : q1= 20-2p1+4Y

(a) Initially the equilibrium price is $=2 and income is $10. What is the total consumer surplus at equilibrium point? What if the demand function is q1=p1^-2Y

(b) If the government imposes consumption tax on the good that raised prices by $1, by how much will the consumer's surplus change?

(d) If you your income is $ 1million,you spend $100 on good 1, and income elasticity was 0.02, does it matter whether you use EV, CV, or consumer surplus to measure the change in consumer welfare in (b).

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M9472571

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