Recall the Application about the decrease in taxes on cigarettes in several Canadian provinces in 1994 to answer the following question(s). According to this Application, after the government deceased cigarette taxes in several Canadian provinces in 1994, the decrease in the price of cigarettes in these provinces :
A. more than doubled the smoking rate.
B. created no noticeable change in the smoking rate.
C. increased the smoking rate by roughly 17 percent.
D. was accompanied by a slight decrease in the rate of smoking.
Answer: C
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Which of the following is an example of moral hazard?
A) I hire you to work in my garden for a fixed fee, and you work hard all day. B) I hire you to work at an hourly rate and you work as slowly as possible. C) You apply for the job only because I pay a fixed wage per day, no matter how much or little you do. D) You agree to be paid by the weed to work in my garden, and then don't work hard.
Which of the following is the best example of tacit collusion?
A) The formation of a cartel. B) Price leadership. C) Predatory pricing. D) Noncooperative pricing behavior.
If the incentive to take advantage of a conflict of interest is high
A) removing the economies of scope that created the conflict may induce higher costs because of the decrease in the flow of reliable information. B) then the government must step in to remove the conflict. C) the costs of non-action in removing the conflict will always be higher than the cost of removing the conflict. D) firms will always step in and work to remove the conflict.
The idea that higher prices reduce the purchasing power of financial assets and lead to less consumption is known as the:
a. real balances effect. b. interest rate effect. c. foreign purchases effect. d. income effect. e. aggregate demand effect.