Assume you have two goods and a b> 0 income. How does the imposition of a lump-sum tax T, which is imposed on everyone regardless of income or market behavior, affect the budget constraint? a. At (0, b/P2), the budget constraint rotates outwards. b. At (0, b/P2), the budget constraint rotates inward. c. In parallel, the budget constraint shifts inwards. d. In parallel, the budget constraint shifts outwards.

Assume you have two goods and a b> 0 income. How does the imposition of a lump-sum tax T, which is imposed on everyone regardless of income or market behavior, affect the budget constraint? a. At (0, b/P2), the budget constraint rotates outwards. b. At (0, b/P2), the budget constraint rotates inward. c. In parallel, the budget constraint shifts inwards. d. In parallel, the budget constraint shifts outwards.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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