Which of the Following Is NOT an Example of Consumer

question 40

Multiple Choice

Which of the following is NOT an example of consumer behavior consistent with the standard assumptions of microeconomic theory?

• A) People are less likely to leave tips at restaurants that they are unlikely to visit again.
• B) Waiters and waitresses have an incentive to provide good service in order to earn tips.
• C) Due to the convention of tipping, restaurants pay a lower wage to waiters and waitresses than they would in the absence of any tipping rule.
• D) Although tipping reduces the amount of income available for purchasing goods, people usually leave tips at restaurants.
• E) none of the above

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Definitions:

Going Out of Business

The process of closing down all operations of a company, often due to financial troubles or bankruptcy.

Fixed Cost

Expenses that do not vary with the level of output or sales, such as rent, salaries, and insurance.

Variable Cost

Costs that vary directly with the level of production or output, such as raw materials and direct labor expenses.

Total Cost

The complete cost of production that includes both variable and fixed expenses.