Sales taxes are routinely collected by
A. the merchants selling the good or services.
B. the Federal Trade Commission.
C. the Department of Commerce.
D. the Internal Revenue Service.
Answer: A
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Protectionism
Which statement best illustrates the concept of diminishing marginal utility?
A. Some consumers will receive less satisfaction from consuming pizza than from consuming hamburgers. B. As one consumes more slices of pizza for lunch, one would be willing to pay a higher price for additional slices. C. A typical consumer will receive less satisfaction from consuming the third slice of pizza for lunch than from the second slice. D. A decrease in the price of slices of pizza will cause consumers to buy more slices for lunch, because they can afford to buy more.
Studies have shown that smoking cigarettes can cause heart disease. Assume this is true, and favorable weather has increased the tobacco harvest in North Carolina. In the market for cigarettes, these two developments would
A) increase demand and increase supply resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of cigarettes. B) decrease demand and decrease supply, resulting in an increase in the equilibrium quantity and a decrease in the equilibrium price of cigarettes. C) decrease demand and increase supply, resulting in a decrease in the equilibrium price and an uncertain effect on the equilibrium quantity of cigarettes. D) decrease demand and increase supply, resulting in an increase in both the equilibrium price and the equilibrium quantity of cigarettes.
If the government wishes to correct the existence of positive externality, it could
A) grant subsidies to consumers to stimulate demand. B) impose a tax on the producers to stimulate supply. C) impose taxes on consumers to stimulate demand. D) grant subsidies to producers to reduce supply.