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Suppose That the U.S.federal Government Decides to

Question 42

Multiple Choice

Suppose that the U.S.federal government decides to
Increase its cigarette excise tax by $1 per pack and also
Apply the increase to U.S.cigarette exports.What will
Happen to the price of cigarettes in the U.S.and abroad?


A) They will both rise by $1 per pack.
B) The U.S.price will rise by $1 per pack, and the foreign price will rise by less than $1 per pack.
C) The foreign price will rise by $1 per pack, and the U.S. price will rise by less than $1 per pack.
D) Both will rise by less than $1 per pack.

Correct Answer:

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