Julio Was Asked to Wear a Button That Said "Drive

question 93

Multiple Choice

Julio was asked to wear a button that said "Drive Safely." Fred was asked to wear a button that said "Save the Whales." Luisa was asked to give $100 to the "Drivers Safety Fund." Maria was not asked to do anything.According to the foot-in-the-door theory,who would be more likely to agree to put a huge "Drive Carefully" sign in his or her front yard?

• A) Luisa, because she will be more likely to comply with a small request than a large request
• B) Julio or Fred would be equally because they both complied with a "small" favour, and will now feel obligated to do a "large" favour
• C) Julio, because he now thinks of himself as a person who believes in the issue of safe driving
• D) Maria, because she has not already "paid her dues" by wearing a button
• E) Maria, because she would experience guilt for her lack of participation

Analyze the impact of taxes and subsidies on firm behavior and market outcomes.

Distinguish between private, social costs, and benefits in the presence of externalities.

Calculate the efficient level of output and price in markets with externalities.

Recognize the difference between negative and positive externalities and their impact on social welfare.

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Definitions:

Customizing

The process of modifying or tailoring products or services to fit specific requirements or preferences of a consumer.

Manufacturing Cost

The total cost incurred by a company to produce goods, including labor, material, and overhead costs.

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or services, calculated in advance based on estimated overhead costs and an allocation base.

Machine-Hours

Machine-hours are a measure of the amount of time a machine is operated, used in allocating manufacturing overhead based on usage.