Susan's preferences can be represented by the utility function x0.51x0.52, where x1 is pounds of chocolate and x2 is pounds of bologna. the price of chocolate is $3 per pound, and the price of bologna is $4 per pound. with income of $1200, susan currently maximizes her utility by purchasing 200.00 pounds of chocolate and 150.00 pounds of bologna.
the government imposes a tax of $2 per pound on chocolate.
how many pounds of chocolate will susan purchase if she maximizes her utility with the tax in place?
how much tax revenue will the government collect from her? $
what dollar amount of an income tax, instead of the quantity tax, would leave susan equally well off? $ (round your answer to the nearest cent.)
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