If the Federal Government Enacts a New Excise Tax of $1.50

question 173

Multiple Choice

If the Federal government enacts a new excise tax of $1.50 per case of soda. Which of the following is most likely to occur?

• A)Consumers of soda will pay a higher price and buy a larger quantity.
• B)Consumers of soda will pay a higher price, which will increase the profits of soda companies, inducing them to sell a larger quantity.
• C)Consumers of soda will pay a higher price and buy a smaller quantity.
• D)Consumers of soda will buy less bottled water.

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