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Suppose the Government Levies a Tax on Sugar at the Rate

Question 33

Multiple Choice

Suppose the government levies a tax on sugar at the rate of $0.50 per pound.Then the government returns the tax revenues to a family in the form of a cash grant equivalent to the average tax paid per family.If the family's cash refund just equals the total amount of tax they paid on sugar,which of the following statements would be true?


A) The family would consume less sugar and be better off.
B) The family would consume the same amount of sugar and be worse off.
C) The family would consume less sugar and be worse off.
D) The family would consume less sugar but their well-being would remain unchanged.

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