Erma and Wayne Are Both Economists

question 117

Multiple Choice

Erma and Wayne are both economists.Erma thinks that taxing consumption,rather than income,would result in higher household saving because income that is saved would not be taxed.Wayne does not think that household saving would respond much to a change in the tax laws.In this example,Erma and Wayne

• A) have different normative views about tax policy.
• B) disagree about the validity of a positive theory.
• C) must both be incorrect because economists always agree on policy issues.
• D) None of the above is correct.

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Definitions:

Price Discrimination

The practice of charging different prices to different consumers for the same product or service, based on willingness to pay.

Antitrust Regulations

Laws designed to prevent anti-competitive practices and promote fair competition among businesses.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on factors like location, age, or buying habits.

Elastic Demand

Refers to a situation where the quantity demanded of a good or service significantly changes in response to changes in its price.