Suppose There Is Currently a $500 Tax on Automobiles That

question 44

Multiple Choice

Suppose there is currently a $500 tax on automobiles that generates $5 million in revenue per year. If the tax increases to $800 per automobile, the revenue the tax generates will increase to $10 million. This tells us that, in this range of tax rates, the quantity effect _______ the price effect.

• A)is greater than
• B)is less than
• C)is equal to
• D)may be greater than or less than

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Definitions:

Social Psychology

The scientific study of how individuals think, influence, and relate to one another within a societal context.

Schemas

Cognitive frameworks or structures that help individuals organize and interpret information, based on prior experience or knowledge.

Encode

To convert information or an idea into a particular form, often for communication or processing.

Stereotypes

Widely held but fixed and oversimplified images or ideas of a particular type of person or thing, often used to generalize about groups of people.