"With two commodities, efficient taxation requires taxing the commodity that is complementary to leisure at a relatively higher rate." This is the definition of
A)the inverse elasticity rule.
B)the Corlett-Hague rule.
C)the Ramsey Rule.
D)the benefits-received principle.

Question

Quizplus · Accepted Answer

The Corlett-Hague rule suggests that to minimize the distortionary effects of taxation, goods that are complements to leisure should be taxed more heavily, as this would indirectly reduce the consumption of leisure, which is typically untaxed.

"With Two Commodities, Efficient Taxation Requires Taxing the Commodity That