Question

1. What role do incentives play in each of the following situations?

a. You learn that you can resell a ticket to next week’s football game for twice what
you paid.

b. A provincial government announces a “sales tax holiday” for back-to-school
shopping during one week in August.

Answer 1

Answer a: In this situation I will tend to resell ticket next week because my wealth will increase without any efforts

Answer b: "Sales tax holiday” make products cheaper, so quantity demanded will increase.