f01mt - GS/ECON 5300 Midterm Exam PUBLIC ECONOMICS I Do all...

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GS/ECON 5300 PUBLIC ECONOMICS I Midterm Exam October 24 2001 Do all 3 questions. All count equally. 1. Demonstrate that any set of commodity taxes will impose a positive excess burden, if a positive amount of revenue is raised by the taxes. 2. Would it be optimal to tax goods 1 and 2 at the same rate in a one–person economy, if the person’s expenditure function E ( q 1 , q 2 , w, u ) could be written E ( q 1 , q 2 , w, u ) = w (1 + u ) - w ln w - w 2 q 1 + w ln q 2 where q 1 and q 2 are the ( tax–included ) prices the person pays for goods 1 and 2,
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