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Scenario: the Government of Nudgekistan Wants to Ban Sales of Sugary

Question 237

Multiple Choice

Scenario: The government of Nudgekistan wants to ban sales of sugary soda out of health concern for its citizens. Rather than a wholesale ban, it bans only the sales of soda in a cup that holds more than 8 ounces. Refills are also banned. On hearing the announcement of the ban, David and Cass, citizens of Nudgekistan, discusses the ban. David says, "This is really coercion by the government to limit the freedom of choice." Cass replies, "Well, if you want more than 8 ounces, you can always buy as many cups as you want. It's not really limiting your choice."
-Refer to the scenario above.Richard,a third citizen,chimes in."It's a bit like a tax on soda if ________."


A) the marginal cost of the second 8 ounce cup is less than the marginal cost of the first 16 ounce cup
B) each 8 ounce cup costs more than twice the cost of a 16 ounce cup
C) the marginal cost of the second 8 ounce cup is more than the marginal cost of the first 16 ounce cup
D) each 8 ounce cup costs more than half the cost of a 16 ounce cup

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