Suppose the State of Wyoming Passes a Law That Increases

question 132

Multiple Choice

Suppose the state of Wyoming passes a law that increases the tax on cigarettes.As a result,smokers who live in Wyoming start purchasing their cigarettes in surrounding states.Which of the following principles does this best illustrate?

• A)People respond to incentives.
• B)Rational people think at the margin.
• C)Trade can make everyone better off.
• D)Markets are usually a good way to organize economic activity.