question archive You have an income of $150 to spend on two goods
You have an income of $150 to spend on two goods
Subject:EconomicsPrice: Bought3
You have an income of $150 to spend on two goods. Good 1 costs $10 per unit and good 2 costs $5 per unit.
(1) Suppose now that a uniform sales tax rate is 0.5 (equivalently, 50% of the price) for both goods. Write down the budget equation and draw it in a graph.
(2) Given the initial economy (without any sales tax), suppose that the income tax rate is t (0<=t<=1). Write down your new budget equation.
