A lump-sum tax:
A) distorts market prices so that they do not simultaneously equal MSB and MSC.
B) can result in price changes but does not prevent prices from simultaneously being equal to MSB and MSC.
C) results in substitution effects that change prices.
D) results in both substitution effects and income effects that change prices.
Correct Answer:
Verified
Q1: Assuming that the income effects are negligible
Q2: A tax on land results in an
Q4: The excess burden of a tax on
Q5: The more price-elastic the demand of a
Q6: A consumer currently pays $500 a year
Q7: An income tax is an example of
Q8: Clothing is sold in perfectly competitive markets
Q9: A lump-sum tax only results in income
Q10: Lump-sum taxes can vary in amount based
Q11: A lump-sum tax results in both income
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