The Russian government wants to reduce the consumption of vodka. A one hundred rouble tax on each bottle purchased may reduce the consumption of vodka under which circumstance(s)?
A) Vodka is an inferior good.
B) Vodka is a normal good.
C) Vodka is an inferior good and the taxes collected from this tax are rebated to consumers.
D) Vodka is a normal good and the taxes collected from this tax are rebated to consumers.
E) both B and C
Question 2
Refer to Figure 9.7. Without counting any government payments received by firms, as a result of this policy the producer surplus earned on the units sold in the market
A) rose by 15,000.
B) rose by 20,000.
C) rose by 40,000.
D) fell by 5,000.
E) fell by 45,000.
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