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In Latavia, Cultural Pressures Cause Voluntary Donations to Orphanages to Be

Question 97

Multiple Choice

In Latavia, cultural pressures cause voluntary donations to orphanages to be very large; in Slobovia, people make smaller donations. If the governments of both countries suddenly grant a tax break to those donating money to orphanages, the basic postulate of economics predicts that donations


A) in both nations will increase.
B) will increase in Latavia but not in Slobovia.
C) will increase only in Slobovia, where people care about taxes, but not in Latavia, where compassion is more important.
D) are unlikely to change in either nation, since voluntary donations are not an economic decision.

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