Budget line if the government applies specific tax

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Reference no: EM131165304

A. What happens to the budget line if the government applies a specific tax of $1 per a gallon of gasoline but does not tax other goods?

B. What happens to the budget line if the tax applies only to purchase of gasoline in excess of 10 gallons per week?

Draw a diagram and explain it.

Reference no: EM131165304

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