"For goods that are unrelated in consumption,efficiency requires that tax rates be inversely proportional to elasticities." This is the definition of
A) the benefits-received principle.
B) the Ramsey Rule.
C) the second best principle.
D) the inverse elasticity rule.

Question

Quizplus · Accepted Answer

The inverse elasticity rule states that for goods that are unrelated in consumption, efficiency requires that tax rates be inversely proportional to elasticities.

"For Goods That Are Unrelated in Consumption,efficiency Requires That Tax