Chapter 6 - Summative Quiz - 1 When the government...

This preview shows page 1 - 2 out of 47 pages.

1. When the government subsidizes an activity, resources such as labor, machines, and bank lending will tend to gravitate _______ the activity that is subsidized and will tend to gravitate _______ activity that is not subsidized. a. toward; toward b. away from; away from c. toward; away from d. away from; toward 2. When the government taxes an activity, resources such as labor, machines, and bank lending will tend to gravitate _______ the activity that is taxed and will tend to gravitate _______ activity that is not taxed. 3. Junk food has been criticized for being unhealthy and too cheap, enticing the poor to adopt unhealthy lifestyles. Suppose that the state of Oklakansas imposes a tax on junk food. What needs to be TRUE for the tax to actually deter the most people from eating junk food? a. Demand for junk food must be perfectly inelastic. b. Demand for junk food must be inelastic. c. Demand for junk food must be elastic. d. Demand for junk food must be unit elastic. 4. Junk food has been criticized for being unhealthy and too cheap, enticing the poor to adopt unhealthy lifestyles. Suppose that the state of Oklakansas imposes a tax on junk food. If the Oklakansas government wants to strongly discourage people from eating junk food will it need to set a higher tax rate when junk food demand is elastic or when it is inelastic? a. when demand is elastic b. when demand is inelastic c. when demand is unit elastic d. when demand is perfectly elastic
Image of page 1

Subscribe to view the full document.

5. If junk food supply is highly elastic—perhaps because it's not that hard to start selling salads with low-fat dressing instead of burgers smothered in mayonnaise and cheese—what does that mean for the impact of a junk food tax? 6. Junk food has been criticized for being unhealthy and too cheap, enticing the poor to adopt unhealthy lifestyles. Suppose that the state of Oklakansas imposes a tax on junk food. If a government is hoping that a small tax can actually discourage a lot of junk food purchases, it should hope for:
Image of page 2
You've reached the end of this preview.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern