Economics · Public Finance
According to the Ramsey Rule for optimal taxation, commodities should be taxed:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Equally across all goods regardless of elasticity
- 2In direct proportion to their income elasticity
- 3Only if they fall in the luxury goods category
- 4In inverse proportion to their price elasticity of demand✓
Correct answer
In inverse proportion to their price elasticity of demand
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