Consider Zhangedys utility function: U = xy, where x is cigarettes and y is dollars spent on all other goods. Zhangedy has income =$30; the price of x = $1.2 and the price of y = $2.1. Note: Answer all the following to 2 decimal places. c) What will the new optimal consumption bundle be with the $1 per unit on good x? Quantity of x = Quantity of y = . Quantity of y = . The level of utility achieved is Consider two proposed tax reforms: Reform 1: Eliminate the tax on good x and impose an income tax that raises the amount of revenue equal to that of the $1 per unit tax on good x. Reform 2: Eliminate the tax on good x and impose an income tax that leaves the consumer at the level of utility reached under the $1 per unit tax on good x. d) What is the quantity of good x that Zhangeldy consumes under Reform 1? What is the quantity of good y consumed under Reform 1? What is level of utility Zhangeldy would would receive under Reform 1? How much worse off would Reform 1 make Zhangeldy than the $1 per unit tax on good x? . (Note: If Reform 1 makes Zhangeldy worse off than the $1 per unit of good x, then enter a positive number. If the $1 per unit of good x makes Zhangeldy worse off than Reform 1, then enter a negative number). e) We now want to determine by how much would Reform 2 will change the amount of revenue for the government? To solve for the amount of the income tax imposed in Reform 2, you need to use the utility function and use the level of utility Zhangeldy would receive with the $1 per unit on good x. Then you need to determine What is the amount of good x consumed under Reform 2? How much income is required to purchase the amount of goods x and y consumed under Reform 2? What is the amound of good y consumed under Reform 2? How much income is required to purchase the amount of goods x and y consumed under Reform 2? How much tax the government would be able to collect in terms of an income tax under Reform 2? How much tax the government would be able to collect in terms of an income tax under Reform 2? How much tax the government would be able to collect in terms of an income tax under Reform 2?