If the government raises the tax on cigarettes, what is the effect on people's incentives and choices?
What will be an ideal response?
The government raises the tax on cigarettes to discourage smoking. With a higher tax the price of cigarettes rises. The opportunity cost of smoking increases, which gives people incentive to cut their consumption of cigarettes.
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Refer to Scenario 13.1. At your negotiated price the producer surplus is:
A) $0. B) $50. C) $200. D) $250. E) $300.
A market situation in which a large number of firms produce similar but not identical products is
A) a collusive market structure. B) competitive monopoly. C) a homogeneous market. D) monopolistic competition.
Revealed preference is:
A. the idea that people's preferences can be determined by observing their choices and behavior. B. the notion that people reveal the utility they get by reporting it on a numerical scale. C. the method that psychologists, anthropologists, and economists use to measure utility. D. All of these are true.
The difference between what can be produced and consumed without specialization and trade and with specialization and trade is called:
a. comparative advantage. b. a tradeoff. c. marginal cost. d. opportunity cost. e. gains from trade.