The Idea That People Change Their Behavior in Response to Taxes

question 108

Multiple Choice

The idea that people change their behavior in response to taxes is

• A)uncontroversial among economists.
• B)highly controversial among economists.
• C)accepted by economists,but debated by those in Congress.
• D)None of these statements is true.

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Definitions:

Short Run

A period in economic analysis in which at least one input is fixed while others are variable.

Long Run

the period in which all factors of production and costs are variable, allowing for all possible adjustments, including the adoption of new technology.

Short-run Equilibrium

A condition in which demand and supply are equal in a particular market or industry, but only for a temporary period due to fixed factors in the short term.

Monopolistic Competition

A market structure characterized by many firms offering products that are similar but not identical, leading to competitive pricing and product differentiation.