When Policymakers Make Policies That Change the Costs and Benefits

question 120

Multiple Choice

When policymakers make policies that change the costs and benefits that people face, what can the policymakers do?

• A)alter behaviours
• B)make people ignore incentives
• C)create inflation
• D)reduce government revenue

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Definitions:

Variable Inputs

Inputs in production that can be adjusted based on the production volume, including labor hours and raw materials, distinguishing them from inputs that remain constant.

Labor

The effort involving both bodily and intellectual activities applied in generating goods and services.

AVC

Average Variable Cost, the total variable cost divided by the quantity of output produced.

AFC

Average fixed cost, or the total fixed costs divided by the quantity of output produced, indicating how fixed costs per unit change with production levels.