In the above figure, if the price is 8 then there is a A) ...

[bcretired]

In the above figure, if the price is 8 then there is a
 
  A) surplus of 100.
  B) surplus of 200.
  C) shortage of 100.
  D) shortage of 200.

Question 2

In New State, the bottling law requires that people get a refund of five cents when they return an empty bottle or can. Why does the state pay people to return bottles? In your answer, be sure to mention the role played by incentives.
 
  What will be an ideal response?

[Rilsmarie951]

Answer to Question 1

B

Answer to Question 2

Policy makers know that people making choices respond to incentives. Instead of throwing away bottles and cans, people will now bring the used bottles and cans to the designated areas for recycling in order to receive their payment. Thus policy makers have taken advantage of people's decision making by increasing the marginal benefit of returning bottles in order to reduce litter and clean the environment.

[bcretired]

Thanks for the timely response, appreciate it

[phuda]

Excellent