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?
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?
