Which of the following is most clearly consistent with the basic postulate of economics regarding the reaction of people to a change in incentives.
A) Farmers produce fewer bushels of wheat in response to an increase in the price of wheat.
B) People will buy more milk at a price of $2 per gallon than at $1 per gallon.
C) People will buy less gas if the price of gas increases by $.20 per gallon.
D) People will consume more beef if the price increases from $1 to $2 per pound.

Question

Quizplus · Accepted Answer

People will buy less gas if the price of gas increases by $.20 per gallon.This is consistent with the basic postulate of economics that people respond to incentives. In this case, the incentive is the price of gas. When the price of gas increases, people will buy less gas because it is more expensive.

Which of the Following Is Most Clearly Consistent with the Basic