Cigarette taxes are imposed to discourage consumption of so-called undesirable goods. Using indifference curves, show the effect

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Cigarette taxes are imposed to discourage consumption of so-called “undesirable goods.” Using indifference curves, show the effect of an increase in taxes on cigarettes. What is the total effect? How much of the change is due to the income effect? How much is due to the substitution effect?

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Exploring Economics

ISBN: 9781544336329

8th Edition

Authors: Robert L. Sexton

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