Some Policymakers Have Argue That Products Like Cigarettes, Alcohol, and Sweetened

question 39

Multiple Choice

Some policymakers have argue that products like cigarettes, alcohol, and sweetened soda generate negative externalities in consumption. All else equal, if the government decided to impose a tax on soda, the equilibrium quantity of soda would ________ and the equilibrium price of soda would ________.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease

Understand the significance of the marginal cost in profit maximization for firms in perfectly competitive markets.

Grasp the conditions under which perfectly competitive firms decide to produce or shut down in the short run.

Recognize the role of price, average total cost, and marginal cost in determining a firm's profitability.

Distinguish between the short run and long run in perfectly competitive markets.

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Definitions:

Treasury Bills

Short-term government securities issued at a discount from the face value and mature in a year or less, used to raise funds and manage the money supply.

Weekly Disbursements

Regular payments or expenditures made by an organization or individual within a one-week period, often related to operational costs.

Interest Rate

The sum demanded by a lender, as a percentage of the principal sum, for allowing a borrower to use their resources.