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With an excise tax of $0.20 per six-pack, Kristine purchases three six-packs of Diet Coke per day. If the government eliminates the excise tax and, instead, requires Kristine to pay $0.60 per day lump-sum tax (the daily tax liability is $0.60 regardless of how much Diet Coke Kristine consumes), how will Kristine s consumption pattern and welfare be affected?

Microeconomics, Economics

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