In Which of the Following Buying Situations Is Creeping Commitment

question 109

Multiple Choice

In which of the following buying situations is creeping commitment most likely to occur?

• A) the purchase of a replacement hydraulic motor for a forklift
• B) the purchase of a local area network (LAN) system
• C) the purchase of the annual Christmas tree from Farmer Gregson
• D) the ordering of a case paper towels for a service station
• E) the purchase of a new goldfish to replace the one that died

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Definitions:

Consumer Surplus

The discrepancy between what buyers are inclined to pay for a service or product and their actual expenditure.

Producer Gains

The profits or positive financial outcomes that producers experience from selling goods or services, often due to pricing or market conditions.

Deadweight Loss

Refers to the loss of economic efficiency when the equilibrium for a good or service is not achieved, leading to a net welfare loss.

Price Floor

A governmental or regulatory minimum price set above the equilibrium price, preventing the market price from falling below a certain level.