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Justin Buys Water (W) at $2 Per Gallon and Food

Question 128

Essay

Justin buys water (W) at $2 per gallon and food (F) at $10 per unit. Justin has an income of $50. Suppose that the government imposes a tax on water of $1 for each gallon consumed beyond 10 gallons. Graph Justin's budget constraint with water on the y-axis and food on the x-axis.

Correct Answer:

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blured image The horizontal intercept is $50/$10 = 5...

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