Question: With an excise tax of 0 20 per six pack Kristine
With an excise tax of $ 0.20 per six-pack, Kristine purchases three six- packs of Diet Coke per day. If the government eliminates the excise tax and, instead, requires Kristine to pay $ 0.60 per day as a lump-sum tax (the daily tax liability is $ 0.60, regardless of how much Diet Coke Kristine consumes), how will Kristine’s consumption pattern and welfare be affected?
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