If We Wanted to Analyze the Effects of a $2

question 87

Multiple Choice

If we wanted to analyze the effects of a $2 unit tax graphically, we would shift the

• A) supply curve upward by $2.
• B) supply curve downward by $2.
• C) demand curve upward by $2.
• D) demand curve downward by $2.

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Definitions:

Agent

A person who acts on behalf of another individual (a principal). Principal–agent problems are created by the incentive conflict between principals and agents.

Principal

An individual who hires another (an agent) to act on his or her behalf.

Incentivize

To motivate or encourage someone by providing a reward or incentive.

Fruit Pickers

Laborers who are employed in agriculture to manually harvest fruits from plants and trees.