In Order to Determine a Causation Between a Change in the Price

question 7

Multiple Choice

In order to determine a causation between a change in the price of iPads and the amount of iPads purchased by customers,an economist must show that

• A)there is no correlation between the price of iPads and the quantity of iPads purchased.
• B)the change in the quantity of iPads purchased occurs after the change in the price of iPads.
• C)the change in the price of iPads occurs along with the change in the quantity of iPads purchased.
• D)the changes in the price and quantity of iPads purchased always move in the same direction.
• E)the change in the price of iPads brings about the change in the quantity of iPads purchased.

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Definitions:

Tax Revenues

The income that is collected by governments through the imposition of various taxes, which is used to fund public services and policies.

Deadweight Losses

The loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved, leading to a net loss in societal welfare.

Incentives

Motivational factors or mechanisms that encourage individuals or groups to behave in a certain way or to take specific actions.

Lump-Sum Taxes

Taxes that are the same amount for everyone, regardless of the taxpayer’s income level or ability to pay.