2) Show that, if everybody has the same time endowment and wage rate, and if all consumption goods including leisure can be taxed at the same ad

2) Show that, if everybody has the same time endowment and wage rate, and if all consumption goods including leisure can be taxed at the same ad valorem rate, that a tax on consumption goods is equivalent to a lump-sum tax.

3) When taxes are implemented under the Ramsey rule, the percentage decrease in quantities of all goods will be the same. Using this fact, show that the relative tax rates are inversely proportional to their elasticities.