5. A consumer has preferences over vegetables and meat given by the utility function U(V, M) = V3M²/3. They currently have $30 to spend, the price of each serving of vegetables is $2 and the price of each serving of meat is $1. The government wants to encourage vegetable consumption so it puts a tax of $1 on each unit of meat purchased. If the consumer maximizes their utility, how much will the tax reduce their meat consumption?

5. A consumer has preferences over vegetables and meat given by the utility function U(V, M) = V3M²/3. They currently have $30 to spend, the price of each serving of vegetables is $2 and the price of each serving of meat is $1. The government wants to encourage vegetable consumption so it puts a tax of $1 on each unit of meat purchased. If the consumer maximizes their utility, how much will the tax reduce their meat consumption?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 3.7P

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