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QUESTION

The small council recently became concerned with the level of public good production in the country.

The small council recently became concerned with the level of public good production in the country. While it was true that citizens were not completely free riding and did purchase some of the public good, the council thought it prudent to impose an income tax of 10 pennies in order to buy five more units of the public goods. Using the budget constraint and indifferent curve graph to illustrate your answer, show that this plan is unlikely to result in a 5 unit net increase of the public good.

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