Ronald's monthly demand for Cap Rock Chardonnay is given by Q = 6 + (
) (I - T) -
P, where I is Ronald's monthly income, T is his tax expense and P is the price of Cap Rock Chardonnay. Suppose the Price of Cap Rock Chardonnay is $10, Ronald's monthly income is $15,000, and his tax expense is $5,000. Calculate how much Ronald changes his Chardonnay consumption if his taxes are increased by 20%. Also, calculate Ronald's Consumer Surplus from consuming Cap Rock Chardonnay before and after the increase in taxes.

Question

Ronald's monthly demand for Cap Rock Chardonnay is given by Q = 6 + (  
) (I - T) -  
P, where I is Ronald's monthly income, T is his tax expense and P is the price of Cap Rock Chardonnay. Suppose the Price of Cap Rock Chardonnay is $10, Ronald's monthly income is $15,000, and his tax expense is $5,000. Calculate how much Ronald changes his Chardonnay consumption if his taxes are increased by 20%. Also, calculate Ronald's Consumer Surplus from consuming Cap Rock Chardonnay before and after the increase in taxes.

Quizplus · Accepted Answer

The Answer of Ronald's monthly demand for Cap Rock Chardonnay is given by Q = 6 + (  
) (I - T) -  
P, where I is Ronald's monthly income, T is his tax expense and P is the price of Cap Rock Chardonnay. Suppose the Price of Cap Rock Chardonnay is $10, Ronald's monthly income is $15,000, and his tax expense is $5,000. Calculate how much Ronald changes his Chardonnay consumption if his taxes are increased by 20%. Also, calculate Ronald's Consumer Surplus from consuming Cap Rock Chardonnay before and after the increase in taxes.

Ronald's Monthly Demand for Cap Rock Chardonnay Is Given by Q