If a tax on unhealthy food items like soda and candy bars causes people to purchase less of these items and eat more healthful a

Question

3 years ago

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If a tax on unhealthy food items like soda and candy bars causes people to purchase less of these items and eat more healthful a

lternatives. Which principle of economics does this illustrate?
A) Rational people think at the margin.B) The cost of something is what you give up to get it.C) People respond to incentives.D) People face tradeoffs.

Business

1 answer:

White raven [17] · Answer 1 · 2022-05-30T14:28:51+03:00

Answer:

The correct answer is C) People respond to incentives.

Explanation:

People respond to incentives is the fourth principle in Economics. For this particular case, adding tax to unhealthy food is a disincentive to buy it and at the same time an incentive to buy healthy food. This happens because incentives make people act, in a positive or negative way towards a certain product, and because <em>rational people</em> use cost and benefit comparisons to buy something.