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You Are Up Late Watching TV One Night and See

question 42

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You are up late watching TV one night and see an ad from Ronco for the Dial-O-Matic food slicer.You learn that the Dial-O-Matic sells for $29.95.But wait,there is more.Ronco is also including in this deal a set of Ginsu steak knives worth $10.95 and another free gift worth $7.95.Assuming that there is a competitive market for Ronco items,at what price must Ronco be selling this three-item Dial-O-Matic deal to insure the absence of an arbitrage opportunity and uphold the law of one price?


Definitions:

Allport and Postman

Psychologists known for their work in the field of social psychology, particularly for studies on the psychology of rumor and the theory of personality.

Participants

Individuals who take part in a study, experiment, or any form of research, usually providing data for analysis.

White Man

Often refers to an adult male of European descent; this term can be contextually sensitive and is subject to socio-cultural interpretations.

Black Man

A term specifying an individual of African descent, often used within societal contexts that explore racial identities and issues.

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