The government imposes a unit excise tax on bubble gum. What ...

[Jipu 123]

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.

Question 2

A price floor set above a market equilibrium price causes
 
  A) a surplus.
  B) a shortage.
  C) producers to receive lower prices.
  D) consumers to pay lower prices.

[Mholman93]

Answer to Question 1

C

Answer to Question 2

A

[Jipu 123]

Gracias!

[bitingbit]

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