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A consumer derives utility for "all other goods," g, and cigarettes, s. The price of "all other ...

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A consumer derives utility for "all other goods," g, and cigarettes, s. The price of "all other ...

A consumer derives utility for "all other goods," g, and cigarettes, s. The price of "all other goods" equals $9 and the price of cigarettes is $10. Now suppose the government implements a $0.50 per-unit tax on cigarettes to encourage a decrease in smoking. How does the tax affect the marginal rate of transformation, MRT?
A) The MRT will decrease to - .
B) The MRT will increase to - .
C) The MRT will increase to - + 0.05.
D) The MRT will decrease to - - 0.05.

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Microeconomics

Edition: 8^th

Author: Perloff

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