Refer to Figure 26-1. In the figure above, the money demand curve ...

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Refer to Figure 26-1. In the figure above, the money demand curve would move from Money demand1 to Money demand2 if
 
  A) the interest rate decreased. B) real GDP decreased.
  C) the price level increased. D) the Federal Reserve sold Treasury securities.

Question 2

Delaware and North Dakota have identical state gasoline taxes of 23.0 cents per gallon. When added to the federal gasoline tax of 18.4 cents per gallon, the total tax on one gallon of gasoline in these two states is 41.4 cents.
 
  On November 8, 2015, the average price of one gallon of regular gasoline was 2.17 in Delaware and 2.28 in North Dakota. Briefly explain whether this is an example of price discrimination. Assume that the gasoline being sold is identical in both states.
 
  Sources: gaspricewatch.com and taxfoundation.org

[helenmarkerine]

Answer to Question 1

C

Answer to Question 2

This appears to be a case of price discrimination, unless the costs of selling gasoline is 2.28 - 2.17 = 0.11 per gallon higher in North Dakota than in Delaware.

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[komodo7]

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