Suppose the State of Rhode Island Passes a Law That

Multiple Choice

Suppose the state of Rhode Island passes a law that increases the tax on beer. As a result, beer consumers who live in Rhode Island start purchasing their beer in surrounding states. Which of the following principles does this best illustrate?

A) People respond to incentives.
B) Rational people think at the margin.
C) Trade can make everyone better off.
D) Markets are usually a good way to organize economic activity.