Examine the validity of the following statements, giving reasons:

(a) Suppose that an individual's budget constraint is given by 11 + 22 = in period 1 (where symbols have their usual meaning). In period 2, an ad-valorem sales tax of 25% is imposed uniformly on good 1 and good 2. The impact of this, as far as the change in income is concerned, is identical to the levying of an income tax of 25% on income, m, in period 2.

(b) If good 1 is a neutral good while good 2 is an undesirable good, then the indifference map will be a set of positively-sloped straight lines that are parallel to each other.

(c) If the utility function is given by = 1 + 2, then the two commodities 1 and 2 are perfect substitutes.