Scott, a Young Professional, Buys a New BMW, Even Though

question 69

Multiple Choice

Scott, a young professional, buys a new BMW, even though a Mercedes would have cost him less.Scott values the BMW brand.This is an example of

• A) a status symbol.
• B) a market segment.
• C) paying a premium price.
• D) predictability in quality.

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Definitions:

Efficient Price

A market price that reflects all available information and results in an allocation of resources that maximizes overall utility.

Marginal Cost

The incurred cost from generating one more unit of a product or service.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is not achievable.

Marginal Cost

The increase in total cost that arises from producing an additional unit of a good or service.