Suppose an excise tax of 1 is imposed on every case of beer sold ...

[NguyenJ]

Suppose an excise tax of 1 is imposed on every case of beer sold and sellers are responsible for paying this tax. How would the imposition of the tax be illustrated in a graph?
 
  A) The supply curve for cases of beer would shift to the right by 1.
  B) The supply curve for cases of beer would shift to the left by less than 1.
  C) The supply curve for cases of beer would shift to the left by more than 1.
  D) The supply curve for cases of beer would shift to the left by 1.

Question 2

Are advertising and brand names efficient?
 
  What will be an ideal response?

[tkempin]

Answer to Question 1

D

Answer to Question 2

Advertising and brand names can increase consumer information about product differences and quality. This information increases consumers' wellbeing and increases efficiency. But advertising and creating a brand name also are costly endeavors. If the MSB from the advertising and brand names is greater than the MSC of the advertising and brand names, then advertising and brand names increase efficiency. But if the MSB from the advertising and brand names is less than the MSC of the advertising and brand names, then advertising and brand names decrease efficiency. Basically, if the additional benefit that consumer's gain from advertising and brand names exceed the costs, then advertising and brand names have a surplus for society and should be increased until their marginal social benefit equals their marginal social cost.

[NguyenJ]

Thank you

[tkempin]

No problemo