In a general equilibrium model,a tax on a single factor in its use only in a particular sector can affect returns to all factors in all sectors.

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This is because a tax on a single factor can shift the production function in that particular sector, which in turn affects the relative prices of goods and factors in all sectors through the market mechanisms of supply and demand. This will cause changes in the allocation of resources and production levels across different sectors, leading to changes in the returns to all factors of production.

In a General Equilibrium Model,a Tax on a Single Factor