Re: Question from ISI 2015 Sample Question Paper

Posted by soumen08 on Mar 12, 2015; 2:52pm
URL: http://discussion-forum.276.s1.nabble.com/Question-from-ISI-2015-Sample-Question-Paper-tp7595913p7595918.html

Whichever way you go, the tax would need to be zero for optimizing social welfare. The main reason people are travelling at all(which is a pure waste in this scenario, since there is no utility associated with it) is because there is a tax. If you dont tax at all, everyone gets the good for p, there is no money wasted on travel, and everyone is happiest.