Which of the Following Is Not Consistent with the Basic

question 155

Multiple Choice

Which of the following is not consistent with the basic postulate of economics that incentives matter?

• A) Farmers produce fewer bushels of wheat in response to an increase in the price of wheat.
• B) A politician votes against a proposal because most of his constituents oppose it.
• C) People drive less because of higher gas prices.
• D) People buy more milk in response to a reduction in the price of milk.

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Definitions:

Complementary Goods

Products or services that are consumed together because the use of one enhances the use of the other.

Cross-Price Elasticity

A measure of the responsiveness of the demand for one product in relation to a change in the price of another product.

Substitutes

Products or services that can be used in place of each other, fulfilling the same need or purpose.

Cross-Price Elasticity

A measure indicating how the demand for one good responds to a change in the price of another good, showing whether they are substitutes or complements.