In a Survey of Consumers, Daniel Kahneman, Jack Knetsch and Richard

question 284

Multiple Choice

In a survey of consumers, Daniel Kahneman, Jack Knetsch and Richard Thaler asked their opinion of a hardware store's decision to

• A)go out of business because a larger hardware store opened in the same city; 82 percent of those surveyed believed it was unfair for the larger store to compete with the smaller store.
• B)raise the price of snow shovels the day following a snowstorm; 82 percent of those surveyed believed this was unfair.
• C)sell tickets to sporting and cultural events at prices higher than prices paid at the ticket windows for the same events; 82 percent of those surveyed believed this was unfair.
• D)remain in business even though the store was not making an economic profit; 82 percent of those surveyed believed it would be unfair for the store to go out of business if there were no other hardware stores in the same area.

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Definitions:

Monetary Growth

The increase in the quantity of money in an economy over time, which can influence inflation and economic activity.

Real GDP

Gross Domestic Product adjusted for inflation, providing a more accurate reflection of an economy's size and growth rate.

Average Price Level

The general level of prices for goods and services in an economy, which can be measured through indices like the Consumer Price Index (CPI).

Precautionary Demand

The demand for financial assets or goods that is motivated by the desire to protect against potential future losses.