Imagine You Find Yourself in a Heat Wave and Your

question 54

Multiple Choice

Imagine you find yourself in a heat wave and your air conditioner has broken.Unable to find a new one at the store because of a price gouging law,you purchase an air conditioner on the black market.What role did the price gouging law have?

• A) It increased the willingness of firms to supply air conditioners when they were out of stock at the stores.
• B) It increased consumer demand for air conditioners.
• C) It decreased the incentive of individuals to supply the good on the black market.
• D) It had no effect on consumers or firms in this situation.
• E) It increased the incentive of individuals to supply the good on the black market.

---

Definitions:

Availability Phenomena

A cognitive bias where individuals give undue weight to information that is readily available to them when making decisions.

Limited Search

The process of looking for information or solutions with restrictions, often due to time, resources, or access limitations.

Bounded Rationality Model

A model that suggests that individuals make decisions based on a limited amount of information and through a simplification of complex problems, constrained by their cognitive limitations.

Equitable Outcome

A result or conclusion of a process that is deemed fair and just, ensuring equal treatment and opportunities for all involved parties.