To simplify our consumption models, suppose U.S. consumers only ...

[vicky]

To simplify our consumption models, suppose U.S. consumers only purchase food and all other goods where food is plotted along the horizontal axis of the indifference map.
 
  Also, suppose that all states initially impose state sales taxes on all goods (including food), but then the states exempt food from the state sales tax. How does this tax policy change alter the consumer's budget line? A) Makes the budget line steeper
  B) Makes the budget line flatter
  C) Parallel rightward shift
  D) Parallel leftward shift
  E) none of the above

Question 2

Which of the following is NOT an example of a way in which microeconomic analysis can help in designing environmental policy?
 
  A) Determining the optimal level of vehicle fuel efficiency standards
  B) Designing laws to provide incentives for firms to implement clean technologies in new vehicles
  C) Lobbying consumers and firms to reduce consumption of energy
  D) Examining the tradeoffs between ecological benefits of environmental legislation and its impacts on consumers' standard of living

[annierak]

Answer to Question 1

B

Answer to Question 2

C