=+f. Suppose an increase in gasoline taxes raises the opportunity cost of driving a mile with a
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=+f. Suppose an increase in gasoline taxes raises the opportunity cost of driving a mile with a fuel-efficient car to the opportunity cost of driving a gas guzzler before the tax increase. Will someone who was previously indifferent between a fuel-efficient and a gas-guzzling car now drive more or less in a fuel-efficient car than he did in a gas guzzler prior to the tax increase?
(Continue with the assumption that tastes are homothetic.)
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Microeconomics An Intuitive Approach With Calculus
ISBN: 9781337335652,9781337027632
2nd Edition
Authors: Thomas Nechyba
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