suppose that a town council plans to raise the tax charged on each pack of cigarettes sold by 20 percent in order to raise its tax revenues. an economist points out to the council that the tax increase could possibly lead to a decrease in packs sold of more than 20 percent, and thus ultimately reduce the city's tax revenues. which of the key concepts in economics is best represented by the economist's observation?

Even if it isn't regarded as being as crucial as managing a household budget or learning how to drive a car, the factors that underlie the study of economics have an impact on every aspect of our lives. Economics' most fundamental goal is to clarify how and why we choose the products we do.

Numerous decisions that people make can be explained by four key economic ideas: scarcity, supply and demand, costs and benefits, and incentives.

Because there aren't enough resources to satisfy everyone's seemingly limitless needs, there is a fundamental economic problem that scarcity explains. As a result, people must decide how to utilise few resources in the most effective manner.

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