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According to the lump sum principle, which of the following statements is correct?
According to the lump sum principle, which of the following statements is correct?
a.Income grants to low-income people will increase their utility more than a similar amount of money spent subsidizing specific goods.
b.Income taxes on high-income people will decrease their utility less than a similar amount of tax revenues collected via taxes on specific goods.
c.The results behind the lump sum principle stem from the fact that income grants & income taxes leave the individuals free to decide how to best allocate whatever final income they have. Subsidies & taxes on specific goods, on the other hand, change individuals' purchasing power but also change the relative prices of goods they face and, thus, distort the choices they make.
d.All of the above
