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Explain your answers and make sure that they are correct. c) Assume all consumers in the state are identical to Janet and thus make the
Explain your answers and make sure that they are correct.
c) Assume all consumers in the state are identical to Janet and thus make the same consumption choices as Janet, both before and after the policy change. Does the government's revenue increase or decrease after the new policy is implemented? Janet consumes two types of food, blueberry scones and quinoa salad. At the current price of $2 per scone, Janet buys 200 scones per year. Worried about increasing diabetes, the state governor imposes a $0.25 sales tax on scones (and on all other sweet bakery and pastry products). To avoid losing the votes of pastry consumers like Janet, who feel impoverished by the new tax, the governor also mails a $50 check to each state resident (including Janet)Step by Step Solution
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