Suppose the absolute price of good X is $10 and the absolute…
Suppose the absolute price of good X is $10 and the absolute price of good Y is $5. A tax is placed on the purchase of good Y only and not another good X. The tax effectively raises the consumer’s pay for good Y from $5 to $10. Now, the relative price of one unit of good Y is ________ units of a good X. *Hint: therefore, the tax makes good Y relatively more expensive and makes good X relatively cheaper.
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