To simplify our consumption models, suppose U.S. consumers only purchase food and all other goods where food is plotted along the horizontal axis of the indifference map
Also, suppose that all states initially impose state sales taxes on all goods (including food), but then the states exempt food from the state sales tax. How does this tax policy change alter the consumer's budget line? A) Makes the budget line steeper
B) Makes the budget line flatter
C) Parallel rightward shift
D) Parallel leftward shift
E) none of the above
B
You might also like to view...
The Fed has announced that its views its long term target for the inflation rate as:
A. 5%. B. 0%. C. 2%. D. 10%.
Okun's Law states that for each percentage point that the unemployment rate is above its natural rate, there is a ________ percent gap between real GDP and potential GDP
A) 4 B) random C) 2 D) 6 E) 8
A price searcher faces the following demand curve: At $9, $8, $7, and $6, the quantity demanded is 10, 20, 30, and 40 units, respectively. If the firm's marginal cost is $50 at any level of output, it would maximize net revenues by
A) producing 10 units and charging $9. B) producing 20 units and charging $8. C) producing 30 units and charging $7. D) producing 40 units and charging $6. E) charging $50 plus markup.
According to the efficient markets hypothesis,
A) common stock prices should be constant. B) the price of a corporation's stock is likely to fluctuate substantially in response to news about changes in the company's short-term prospects. C) the price of a corporation's stock will fluctuate significantly only in response to news about changes in the company's long-term prospects. D) price fluctuations in common stock are a response to fads and are only infrequently the result of changes in the expected profitability of the companies involved.