The country of Taxmania produces only two commodities: rice and caviar. The poor spend all their income

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The country of Taxmania produces only two commodities: rice and caviar. The poor spend all their income on rice, whereas the rich purchase both goods. Both demand for and supply of rice are quite inelastic. In the caviar market, both supply and demand are quite elastic. Which good would be heavily taxed if Taxmanians cared mostly about efficiency? What if they cared mostly about vertical equity?
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Economics Principles and Policy

ISBN: 978-0538453653

12th edition

Authors: William J. Baumol, Alan S. Blinder

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