Question: c. Now illustrate how the consumption possibilities frontier changes if the government uses an inefficient tax system. Suppose the inefficiency takes the following form: As
c. Now illustrate how the consumption possibilities frontier changes if the government uses an inefficient tax system. Suppose the inefficiency takes the following form: As the tax rate on the rich increases, consumption of the rich decreases as if the tax system were efficient, but the deadweight loss increases at an increasing rate as the tax rate rises, with this loss reducing the amount available for distribution to the poor.
d. Illustrate how a Rawlsian government might now not choose to equalize consumption levels between the rich and the poor.
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