A consumer purchases housing (H) and spends the remainder of income on the composite good (C). The government is considering one of two policies. Policy A taxes housing by $50 per unit consumed
With the tax in place, the consumer purchases 100 units of housing. Policy B collects a lump-sum tax of $5,000 from the consumer's income. Compare the effects of the policies on the consumer's utility/well-being and the amount of housing and composite goods purchased.
The lump-sum policy will allow him to reach the same bundle as with the tax while now leading to more preferable bundles with the change in slope of the budget constraint. Thus he will prefer the lump-sum tax and will purchase more housing and less of the composite good as compared to with a housing tax.
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According to the table above, the money income distribution is ________ unequal than the market income distribution because ________ income reflects income redistribution through taxes and benefits
A) less; money B) less; market C) more; money D) more; market
Unit taxes vary along with the price of the taxed commodity.
A. True B. False C. Uncertain
Technological changes that increase productivity shift the
A. Marginal cost curve upward. B. Production function downward. C. Marginal physical product curve downward. D. Average total cost curve downward.
Publicly provided health insurance for the poor will
A. raise the price of health care to the non-poor. B. increase the total amount of health care consumed. C. raise the price of health care to the non-poor and increase the total amount of health care consumed. D. raise the level of health care consumed by the non-poor.