Assume the supply function of ice cream is written as: Qs = 100 + ...

[kaid0807]

Assume the supply function of ice cream is written as: Qs = 100 + 20P - 10Pm, where Qs is the quantity supplied, P is price of ice cream, and Pm is the price of milk (/gallon).
 
  If milk price increases by 2/gallon due to the policy change, how will the Qs change? A) decreases by 20
  B) increases by 20
  C) decreases by 10
  D) increases by 10

Question 2

If government decides to produce a collective consumption good, taxes have to be levied to finance the production. In evaluating government provision then, the benefits of public production have to be _____.
 
  a. high
  b. weighed against the excess burden of taxation
  c. positive
   d. weighted against the tax incidence on poor families

[rachel]

Answer to Question 1

A

Answer to Question 2

b

[kaid0807]

Gracias!

[scikid]

Excellent