A Policy Maker Has Argued for Higher Taxes on Gasoline

question 28

Multiple Choice

A policy maker has argued for higher taxes on gasoline to reduce the negative externalities associated with driving. This policy will lead to a relatively ________ reduction in driving if demand is ________.

• A)small; perfectly elastic
• B)large; perfectly inelastic
• C)small; relatively inelastic
• D)large; relatively inelastic

---

Definitions:

Intuitive

Pertaining to using or based on what one feels to be true even without conscious reasoning; instinctive.

Programmed Decisions

Decision-making processes that are routine and repetitive, often automated or guided by established policies and procedures.

"If-then" Decision Rules

Logical constructs used in decision-making that trigger specific actions if certain conditions are met.

Framing Error

A cognitive bias where information is perceived and interpreted through a subjective lens, potentially leading to misconceptions.