Question: In the case of a consumer with a given level of income and the choice of spending that income on commodities X and Y, evaluate

In the case of a consumer with a given level of income and the choice of spending that income on commodities X and Y, evaluate whether an excise tax on X or an equal-yield income tax will impose the least excess burden. Write the consumer’s budget constraint. Incorporate each tax separately and evaluate the tax effects on the budget line and the consumer’s utility maximizing commodity combination. Use a graph to demonstrate.

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