Which of the following should be expected if the tax for a certain good increases?
A)price of the good increases.
B)the composition of the commodity bundle is distorted.
C)the budget line pivots out.
D)only a and b.

Question

Quizplus · Accepted Answer

When the tax on a good increases, the price of the good typically increases (A), and the composition of the commodity bundle is distorted as consumers adjust their consumption in response to the price change (B). The budget line pivots inward, not out, so C is incorrect.

Which of the Following Should Be Expected If the Tax