Question
A consumer originally faces the budget line PXX + PYY = M. The government imposes a lump-sum tax of u , a quantity tax on
A consumer originally faces the budget line PXX + PYY = M. The government imposes a lump-sum tax of u, a quantity tax on good X of t, and a quantity subsidy on good Y of s. Write the equation for the new budget line in the format of Y = a + bX.
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Economics of Money, Banking and Financial Markets
Authors: Frederic S. Mishkin
9th Edition
978-0321607751, 9780321599797, 321607759, 0321599799, 978-0321598905
