The government imposes a unit excise tax on bubble gum. What happens as a result?
A. There will be no change in either the market price or equilibrium quantity as long as the excise tax rate is 5 percent or less.
B. At the original market price, there is a bubble gum shortage and so price rises.
C. The equilibrium quantity of bubble gum increases.
D. At the original market price, there will be a bubble gum surplus so price decreases.
Answer: B
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Tiebout local public good provision is more easily implemented than a Lindahl equilibrium -- because people know each other's tastes locally and can more easily come up with the right way to divide the cost for public goods.
Answer the following statement true (T) or false (F)
If a seller enjoys a producer surplus of $30 when he sells a good for $79, his reservation value for the good is ________
A) $30 B) $49 C) $79 D) $109
What is a model? Can you think of a model that you might use in your everyday life?
What will be an ideal response?
Between 1930 and 1933, many banks in the U.S. failed because: a. the FDIC moved too slowly to prevent the bank failures
b. most bankers were either corrupt or incompetent. c. of excessive regulation by the federal government. d. people shifted their funds to take advantage of rising stock market prices. e. people lost confidence in them.