Consumers Buy Both Alcoholic and Nonalcoholic Beverages

question 60

Multiple Choice

Consumers buy both alcoholic and nonalcoholic beverages.If the government tries to discourage people from drinking alcoholic beverages by imposing an excise tax on them but gives consumers an income subsidy to keep the consumers on their original indifference curves:

• A)the same amount of both goods will be consumed.
• B)fewer alcoholic and more nonalcoholic beverages will be consumed.
• C)more alcoholic and fewer nonalcoholic beverages will be consumed.
• D)it is impossible to determine what will happen to the consumption of alcoholic and more nonalcoholic beverages.

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