Suppose that a state government levies an ad valorem sales tax on the purchase of all goods at retail but not on the purchases of services. The tax is levied only on final sales of goods and not on sales of any intermediate goods. The state has a companion use tax but makes little effort to collect that tax for consumer purchases except for automobiles.

Discuss the various ways (there are at least four) an individual consumer could change behavior to avoid or reduce liability for the state sales tax. What economic costs could arise from each type of action?