Explain why a tax increase on cigarettes in one state might not lead to a substantial price increase for all consumers in that state
What will be an ideal response?
Smuggling of non-taxed cigarettes and on-line buying where taxes don't apply by some consumers may prevent a price increase for these consumers.
You might also like to view...
While many analysts defended the actions taken by the Fed and the Treasury to respond to the financial crisis in 2008, others were critical of these actions. The critics were concerned that by not allowing large firms to fail,
A) stockholders and bondholders of these firms were not allowed to receive the proceeds from the sale of assets that would have occurred if the firms had declared bankruptcy. B) there will be less competition in the U.S. economy, which could led to higher prices for consumers. C) smaller firms will resent not receiving similar assistance. D) there is an increased likelihood that other firms will engage in risky behavior in the future with the expectation that they will also not be allowed to fail.
Always There Wireless is wireless monopolist in a rural area. There are 200 customers, each of whom has a monthly demand curve for wireless minutes of Qd = 200 - 100P, where P is the per-minute price in dollars and Q is the number of wireless minutes. The marginal cost of providing the wireless service is $0.25 per minute. If Always There charges $0.25 per minute and the largest fixed fee that it can, what is Always There's profit per customer?
A. $153.13 B. $196.88 C. $200 D. $175
Assume that business investment spending rises, and the increase is funded by greater borrowing in the capital markets. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real GDP and reserves account in the context of the Three-Sector-Model? a. Real GDP rises and reserves account becomes more positive (or less negative)
b. Real GDP rises and reserves account remains the same. c. Real GDP and reserves account remain the same. d. Real GDP rises and reserves account remains the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
The demand for a resource depends primarily on:
A. the supply of that resource. B. the demand for the product or service that it helps produce. C. the price of that input. D. the elasticity of supply of substitute inputs.