Article Summary
In an attempt to discourage smoking, New York City Mayor Michael Bloomberg proposed a bill which would set a $10.50 minimum price for a pack of cigarettes. The bill would also prohibit retailers from offering any discounts such as 2-for-1 offers or accepting discount coupons. New York City already has the highest cigarette tax in the country, at $5.85 per pack, and the state of New York is one of many which already require cigarettes be marked up by a specified percentage. This bill is a companion to one which would require stores to keep tobacco products hidden from sight. Although the bills are expected to be challenged in court, a precedent has been set in Rhode Island, where a court upheld a ruling allowing the city of Providence to forbid retailers from accepting coupons and offering discounts on cigarettes.
Source: Vivian Yee, "Bloomberg Seeks End to Cheap Cigarettes," New York Times, March 26, 2013.
-Refer to the Article Summary. The minimum price of $10.50 per pack of cigarettes being proposed by Mayor Bloomberg is an example of
A) a price ceiling.
B) a price floor.
C) an economically efficient price.
D) a black market price.

Question

Quizplus · Accepted Answer

The minimum price of $10.50 per pack of cigarettes being proposed by Mayor Bloomberg is an example of a price floor, as it is a minimum price set above the market equilibrium price in order to discourage smoking.

Article Summary In an Attempt to Discourage Smoking, New York City Mayor