(5) Assume that the consumption function is given by C = 25 + 0.6(Y - T) and the tax function is given by T = t0 + t1Y. If t0 increases by 1 unit, then consumption decreases by 0.4 units.

(2) James gets utility only from his caffeine intake. He can consume good Y or good X, and good Y contains twice as much caffeine as good X. (2%) James has an incon me of M a month. The price of good X is Px per unit, and the price of good Y is Py per unit. What is James' budget line? (2%) What is the optimal choice of James for good Y and good X? (4%)

題組內容

(5) Assume that the consumption function is given by C = 25 + 0.6(Y - T) and the tax function is given by T = t₀ + t₁Y. If t₀ increases by 1 unit, then consumption decreases by 0.4 units.

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