Viewed from origin, a price distorting tax creates a new budget line with a ______ slope relative to the budget line without the tax.

Question

Quizplus · Accepted Answer

A price distorting tax shifts the original budget line to a higher price level, causing the new budget line to have a steeper slope than the original one. This is true as the consumer will have to give up more of one good to afford the same quantity of another good due to the increased price caused by the tax. Therefore, the correct choice is B, more steep.

Viewed from Origin, a Price Distorting Tax Creates a New