The Endowment Effect Suggests That That People

question 186

Multiple Choice

The endowment effect suggests that that people

• A)have a strong attachment to their property, regardless of whether they paid to acquire it.
• B)have a strong sense of fairness.
• C)are concerned about the welfare of others.
• D)act in ways to distort market prices.

---

Definitions:

ATC

The total cost per unit of output, calculated by dividing the total cost by the amount of output produced.

Long-Run Equilibrium

A state in which all factors of production are fully adjusted to the economic conditions, leading to a situation where there is no tendency for change.

Purely Competitive Firm

refers to a company that operates in a market where there are many buyers and sellers, no barriers to entry, and the product is a commodity, leading the firm to be a price taker.