Question

Assume that a 2 cent per Ounce percent soda tax led to a large increase in its price and only a small decrease in the quantity of soda domanded Economic analysis would lead on to conclude that O the benefits of taxing soda is a normative issue Economic analysis can be used to contribute to discussion of this issue but cannot decide it B oda should be taxed because the benefits of the tax would exceed the costs OC. soda should not be taxed on ethical grounds since ethical benefits and costs can't be measured OD. Voda should not be taxed because the benefits are uncertain ON od Click to select your answer.

Answer 1

Question: If the quantity demanded for a good rises as income rises then the income elasticity of demand for this good is ___________ than 0, and the good is __________ good.

Answer: C. Greater ; a normal

If the quantity demanded for a good rises as income rises then the income elasticity of demand for this good is greater than 0, and the good is a normal good.

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Question: Which of the following items is likely to have the highest income elasticity of demand?

Answer: C. A vacation home in the Swiss Alps

For the luxury goods, the income elasticity of demand is high, and greater than one. Among the given items here, the income elasticity of demand should be highest for a vacation home in the Swiss Alps. If income rises, the demand for a vacation home in the Swiss Alps, which is costly enough, will rise rapidly, and vice versa.

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Question: The term 'property rights' refers to

Answer: A. The ability to exercise control over one's own resources within the confines of the law.

A person has a sole right on his/her property. The property right is a legal right given to a person to exercise control over this own property.

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Question: If in the market for oranges the supply has increased, then

Answer: C. The supply curve for oranges has shifted to the right.

The increase in the supply means, at the same price level, the supply of the goods has increased. Then the supply curve shifts rightward. Here, if the supply of oranges has increased in the market, then the supply curve of oranges will shift rightward, and at the same price level, more oranges will be supplied.

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