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Which type of tax will john prefe

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The government wants to raise $50 a month from John Doe. A $1sales tax per package of cigarettes will raise the required revenue as will alump-sum tax of $50 per month. (With a lump-sum tax, John has to pay$50 regardless of how many cigarettes he buys or regardless of what hisincome is.)A. Which type of tax will John prefer - the sales tax or the lump sumtax? Explain carefully. ("Explain carefully" means that you should use thetools of indifference curve analysis.)B. Will he smoke more cigarettes with the sales tax or the lump-sumtax? Explain carefully. 

Reference no: EM13978400

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