Answer to Question #279632 in Macroeconomics for minma

Question

1) The government decides there is no relationship between drinking and health problems. It lowers the excise taxes on gin. Ceteris paribus can be expected to cause the equilibrium quantity of gin sold to:

a) Increase.

(b) Decrease.

(c) Not change.

(d) Decrease at an increasing rate.

(e) There is not enough information to answer this question.

2) Sometimes coffee growers in Brazil have destroyed some or their entire coffee crop in order to keep it from going to market. This suggests that:

(a) They believed that there was an international shortage of coffee.

(b) They believed that coffee was an inferior good.

(c) They believed that the demand for coffee was inelastic.

(d) They believed that they faced an inelastic supply curve for coffee.

(e) None of the above.

Answer 1

1. b) Decreases

2. c) They believed that the demand for coffee was inelastic