8. LO 4 Show that the consumer is better off with a lump-sum tax rather than a proportional tax on wage income (as in question 3) given that either tax yields the same revenue for the government. You must use a diagram to show this. ( Hint: The consumption bundle the consumer chooses under the proportional tax must be just affordable given the lump-sum tax.)

8. LO 4 Show that the consumer is better off with a lump-sum tax rather than a proportional tax on wage income (as in question 3) given that either tax yields the same revenue for the government. You must use a diagram to show this. ( Hint: The consumption bundle the consumer chooses under the proportional tax must be just affordable given the lump-sum tax.)

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter3: Economic Decision Makers

Section: Chapter Questions

Problem 3.10P

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