1. True or False explain in detail. Subject: Public Finance

(a) The Coase theorem states that, if leisure can not be taxed, efficient taxation requires relatively high taxes on goods that are close substitutes for leisure.

(b) If the wage is exogenous, a lump sum tax is equivalent to an equi-proportional tax (i.e., a tax at the same rate) on all commodities except leisure.

(c) If the ordinary (uncompensated or Marshallian) demand function for glue is perfectly inelastic, there is no excess burden associated with a tax on the glue.

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a Given statement is false Explanation The Coase theorem is not on the basis of if leisure can not b... View the full answer