Q3. In a society, where only food and clothing are consumed, suppose that there has been a sharp
decline in the price of food. The government treats this as an opportunity to raise income tax,
without attracting opposition. illustrate the shift in the budget line if the government raises tax
such that
a. People find themselves at the same level of satisfaction as before (when price of food was
more)
b. Government ensures that people are still able to buy their original bundle of food and
clothing if they wish so.
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