3. (10 points) A lump-sum tax Explain the concepts of excess burden of a tax and use indifference curve analysis to compare the effects of a lump-sum tax and a price-distorting tax on decisions and well-beings of an individual. Explain which tax is more efficient and why. Briefly explain why the UK's Community charge was not a success. 4. (10 points) Adverse selection and moral hazard Anti-lock brakes help prevent cars from skidding out of control when the driver slams on the brakes. For several years, carmakers and insurance companies have been promoting anti-lock brakes as a safety feature. However, a recent study found that accident rates for cars with anti- lock brakes are no lower than for the same model cars without anti-lock brakes. Explain how this finding could be results of either adverse selection or moral hazard, eve of anti-lock brakes do have safety benefits