Two Economists Are Debating Whether to Remove a Tariff on Luxury

question 35

Multiple Choice

Two economists are debating whether to remove a tariff on luxury vehicles. They agree that consumers will benefit by $5 billion and that the harm done to domestic businesses and workers will be only $4 billion. One argues that these facts make it obvious that the tariff should be removed. The other disagrees. What would be a likely reason for the second economist to disagree?

• A) There is no good reason because the benefits outweigh the costs.
• B) He or she is using a different economic model to understand the world.
• C) He or she has a different interpretation of the empirical evidence.
• D) He or she has different value judgments about the weights that should be put on the benefits and costs.

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Definitions:

Friendly Skepticism

An attitude of openness to new ideas or claims but with a readiness to critically evaluate their validity or truth.

New Ideas

Fresh or innovative thoughts, concepts, or perceptions not previously thought of or recognized.

Critical Thinker

An individual who engages in analysis, evaluation, and synthesis of information to form reasoned judgments.

Systematically Evaluates

The methodical assessment or examination of systems, processes, or materials to draw conclusions.