A policy taxes a normal good and raises its price. The government also refunds enough money to the consumer so that the consumer is still able to buy their original bundle even with the higher price. 1) The consumer will buy exactly the same quantity of the good that they originally did. II) The budget line with the tax and refund will be flatter than the original budget line. Select one: a. Both statements are false. b. Both statements are true. c. Statement II is true but statement I is false. d. Statement I is true but statement II is false.

A policy taxes a normal good and raises its price. The government also refunds enough money to the consumer so that the consumer is still able to buy their original bundle even with the higher price. 1) The consumer will buy exactly the same quantity of the good that they originally did. II) The budget line with the tax and refund will be flatter than the original budget line. Select one: a. Both statements are false. b. Both statements are true. c. Statement II is true but statement I is false. d. Statement I is true but statement II is false.

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

ChapterST7: The Economics Of Health Care

Section: Chapter Questions

Problem 7CQ

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