In the Classroom Mug Experiment, Students Receive the Mug for Free

question 76

Multiple Choice

In the classroom mug experiment, students receive the mug for free and are willing to sell it:

• A) for less than it's perceived market value, since it was free in the first place.
• B) for exactly the perceived market value, without enjoying a gain or suffering a loss.
• C) only for more than its perceived market value; otherwise it would create a perceived loss.
• D) for any amount the buyer would offer, since it was free in the first place.

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Definitions:

Vertical Axis

in a graph or chart, the y-axis which typically represents the range of values or dependent variables.

Perfect Substitute

Goods that can be completely replaced by another with no loss of utility to the consumer, such as different brands of sugar.

Units Of Good

The individual items or quantities of a product that can be quantified, counted, and often sold individually.

Utility Function

A mathematical representation of a consumer's preference system, ranking different bundles of goods and services by their levels of satisfaction.