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7) Suppose the government taxed gasoline and gave everyone a sum of money which allowed people to remain at the level of utility they could
7) Suppose the government taxed gasoline and gave everyone a sum of money which allowed people to remain at the level of utility they could achieve before the tax. Which of the following would be true? a. The amount of money given to everyone to keep them at the original level of utility would have to be more than enough money to purchase their original bundle. b. This will cause the quantity of gas purchased to be higher than before the tax. C. Even though the government is creating an Increase In Income, the substitution effect from the tax remains. d. All of the above
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