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Below is a consumer choice model featuring one 'bad' and one 'good.' The good, car travel, can only be produced by simultaneously increasing the production
- Below is a consumer choice model featuring one 'bad' and one 'good.' The good, car travel, can only be produced by simultaneously increasing the production of the bad (pollution). Given the preferences and constraints pictured,
- what would be the effect of a tax on pollution (Further assume that the tax is not paid for by the consumers pictured, and that it does not influence market prices)?
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