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    Principles of Taxation
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    Exam 2: Policy Standards for a Good Tax
  5. Question
    The City of Berne Recently Enacted a 10% Tax on the Price
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The City of Berne Recently Enacted a 10% Tax on the Price

Question 1

Question 1

True/False

The city of Berne recently enacted a 10% tax on the price of a subway ticket. Consequently, Mrs. Lane now walks to work instead of taking the subway. Her behavior illustrates the substitution effect of a tax increase.

Correct Answer:

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