A Partner at a Major Law Firm Spent $90 for a Ticket

question 117

Multiple Choice

A partner at a major law firm spent $90 for a ticket to the Rockstar Energy Mayhem Festival, featuring Disturbed, Godsmack, and Megadeth and then lost it. Should he buy another $90 ticket?

• A) Yes, there is no substitution effect and the income effect is trivial given his wealth.
• B) Yes, there is a positive substitution effect and the income effect is large given his wealth.
• C) No, there is some substitution effect and the income effect is trivial given his wealth.
• D) No, there is a positive substitution effect and the income effect is large given his wealth.

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Definitions:

Nonparametric Test

A statistical test used when the assumptions for parametric tests are not met, not requiring the population's distribution to follow any specific distribution.

Mann-Whitney U Test

A nonparametric test used to compare differences between two independent groups when the dependent variable is either ordinal or continuous, but not normally distributed.

Paired-difference Experiment

An experimental design where the observations are made in pairs, and the analysis is based on the differences within each pair.

Rejection Region

The range of values for which the null hypothesis is not considered likely and is rejected in a statistical test.