The government imposes a unit excise tax on bubble gum. What happens as a result?
A) The equilibrium quantity of bubble gum increases.
B) At the original market price, there will be a bubble gum surplus so price decreases.
C) At the original market price, there is a bubble gum shortage and so price rises.
D) 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.
Answer: C
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Moral hazard is the
A) outcome of a Prisoner's Dilemma. B) result of market signaling. C) risk associated with a Dutch auction. D) risk that one party to a contract may alter its post-contract behavior to the detriment of another party.
Janet is a farmer. Which of the following are included in her human capital?
a. her tractor and what she's learned from experience b. her tractor but not what she's learned from experience c. what she's learned from experience but not her tractor d. neither her tractor nor what she's learned from experience