1. If the price of donuts increases. What happens to the price and quantity of coffee?

a. Price of coffee goes up and quantity of coffee decreases

b. Price of coffee decreases and the quantity of coffee decreases

c. Price of coffee decreases and the quantity of coffee increases

d. Price of coffee increases and the quantity of coffee increases

2. How would you show an increase in technology for both goods using a production possibility curve graphically?

a. As a point outside the production possibilities curve

b. As a shift in the curve outward and to the right

c. As an increase in normal good income using supply and demand curves

d. As a point inside the production possibilities curve

e. None of the above

3. A regressive tax is:

a. The marginal rate of tax increases as the base increases.

b. The marginal rate of tax decreases as the base increases.

c. The average rate of tax decreases as the base increases

d. The marginal rate of tax increases as the base stays constant

e. None of the above