When the price of a pizza decreases from $14 to $12
A) the income effect means people buy less pizza.
B) the income effect points out that the total purchasing power of people who buy pizza increases.
C) the income effect means that the demand for pizza will not change.
D) None of the above answers is correct.
B
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The nature of demand indicates that as the price of a good increases:
The dead-weight loss from an excise tax
a. is greater if demand is perfectly inelastic. b. is caused by a shift in consumer preferences when the tax is raised. c. is the lost surplus that results from higher prices and lower output resulting from the tax. d. is of little concern to policy makers since all excise taxes are "sin" taxes. e. is the difference between consumer surplus and producer surplus.
The set of skills, knowledge, experience, and talent that determine people's productivity as workers is called:
A. physical capital. B. investment. C. human capital. D. educational training.
The _____ tend to have a smaller public sector relative to the total economy
a. socialist economies b. centrally planned economies c. autocratic economies d. market economies e. mercantilist economies