Recently, many cities have attempted to pass laws taxing the sale of sugary drinks such as soda pop. If one of these laws passes, we would expect
A) the supply curve for soda pop to shift to the right.
B) the supply curve for soda pop to become more vertical.
C) the demand curve for soda pop to shift to the right.
D) the demand curve for soda pop to shift to the left.
D
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In the Baumol model, a change in fixed costs will
A) increase total quantity sold. B) have no effect on total quantity sold. C) decrease total quantity sold. D) have an effect on total quantity sold.
Economic models are only useful in analyzing government policy
A) True. Individuals are irrational and therefore economic models are useless. B) False. Economic models can be used to predict individual and firm behavior. C) True. Economists only model those questions for which they are hired. D) False. Economic models are not even useful in analyzing government policy.