Assume that the goods in the following list are unrelated in consumption: Diamonds, Rice, Smartphones and Sugar. The government wishes to tax the goods in order to raise revenue with the least amount of distortion. How should the government rank the goods in terms of tax rates (with highest tax first)? Explain your reasoning.

Assume that the goods in the following list are unrelated in consumption: Diamonds, Rice, Smartphones and Sugar. The government wishes to tax the goods in order to raise revenue with the least amount of distortion. How should the government rank the goods in terms of tax rates (with highest tax first)? Explain your reasoning.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter21: Fiscal Policy

Section: Chapter Questions

Problem 3SQP

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