A Move from One Point on a Contract Curve to Another

question 29

Multiple Choice

A move from one point on a contract curve to another point on the contract curve will make:

• A) both individuals better off.
• B) both individuals worse off.
• C) one individual better off and the other individual worse off.
• D) the goods more expensive.

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Definitions:

Excise Tax

A tax levied on specific goods, services, or transactions, often imposed on alcohol, tobacco, and gasoline.

Supply Curve

A graphical representation showing the relationship between the price of a good and the amount of it that suppliers are willing to produce and sell.

Perfectly Inelastic

A scenario where the demand for a good does not change in response to changes in price, represented by a vertical demand curve.

Excise Tax

A tax charged on specific goods, such as tobacco and alcohol, usually to discourage their use and generate revenue.