A Local Consumer Reporter Wants to Compare the Average Costs

question 42

Multiple Choice

A local consumer reporter wants to compare the average costs of grocery items purchased at three different supermarkets, A, B, and C. Prices (in dollars) were recorded for a sample of 60 randomly selected grocery items at each of the three supermarkets. In order to reduce item-to-item variation, the prices were recorded for each item on the same day at each supermarket. $$\begin{array} { l l c c c } \hline & \text { Item } & \text { A } & \text { B } & \text { C } \\\hline \text { 1) } & \text { paper towels } & 1.26 & 1.46 & 1.41 \\\text { 2) } & \text { cereal } & 2.76 & 3.21 & 2.96 \\\text { 3) } & \text { floor cleaner } & 5.93 & 5.81 & 6.82 \\\text { ? } & \text { ? } &\text { ? } & \text { ? } & \text { ? } \\ \text { 59) } & \text { shaving cream } & 1.08 & 0.98 & 1.04 \\\text { 60) } & \text { canned green beans } & 0.54 & 0.69 & 0.46 \\\hline\end{array}$$ Identify the treatments for this experiment.

• A) the three supermarkets
• B) the 60 grocery items
• C) the 60 × 3 = 180 prices
• D) the day on which the data were collected

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Definitions:

Risk Averse

A characteristic of individuals who prefer to avoid risk, choosing certainty over uncertainty even if it results in a potentially lower return.

Marginal Utility Function

A mathematical representation that describes how the utility or satisfaction derived from consuming an additional unit of a good changes as more of the good is consumed.

Utility Function

A utility function is a mathematical representation of a consumer's preference ranking for different bundles of goods, showing the level of satisfaction for each.

Wealth

A substantial amount of monetary assets or physical valuables that are capable of being changed into a format usable for trading purposes.