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Homework answers / question archive / Suppose that the average household in a state consumes 500 gallons of gasoline a year
Suppose that the average household in a state consumes 500 gallons of gasoline a year. A 10 cent tax per gallon of gasoline is introduced, and couples are given a $50 annual tax rebate per household. Will the household be better or worse off after the new program is introduced? (Hint: Think of this in terms of a Slutsky pivot.)
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