Mr Inflexible's Utility Function Is U(x₁,x₂)= Min(x_1,x₂)

Multiple Choice

Mr. Inflexible's utility function is U(x₁,x₂) = min(x_1,x₂) . The price of x₁ is $1, the price of x₂ is $2, and Mr. Inflexible's budget is $120. If Mr. Inflexible were given the choice between a lump- sum tax and an excise tax which raised the same amount of tax revenue, then:

A) he would prefer the excise tax.
B) he would prefer the lump- sum tax.
C) he would be indifferent between them.
D) one cannot say which tax he would prefer.