Multiple Choice
A lump-sum tax:
A) distorts market prices so that they do not simultaneously equal MSB and MSC.
B) can result in price changes but does not prevent prices from simultaneously being equal to MSB and MSC.
C) results in substitution effects that change prices.
D) results in both substitution effects and income effects that change prices.
Correct Answer:
Verified
Correct Answer:
Verified
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