Problem
What is the amount of the income tax that allows the Gates to purchase the same bundle that they were purchasing before the subsidy? Illustrate on a new diagram the Gatesr original budget line, the Gates' budget line after the subsidy, and the Gates' budget line after the income tax. [Make sure that the amount of the income tax re?ected in the Gates' after tax budget Zine allows them to purchase the same bu ndle that the Gates were buying before the subsidy]