Suppose That Richard Has Just Told You That He Would

question 255

Multiple Choice

Suppose that Richard has just told you that he would not pay more than $100 dollars for one of his favorite baseball cards. You offer to give him $110 dollars for his card and he refuses. What consumer choice theory or effect explains this result?

• A) the endowment effect
• B) bounded rationality
• C) bounded self-interest
• D) bounded will power

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Definitions:

Collude

To come together in secret agreement, especially for a deceitful or illegal purpose.

Marginal Cost

The increase in total cost that arises from producing one additional unit of a product or service.

Annual Fixed Cost

Regular, unchanging expenses incurred by a business, regardless of its level of production or sales volume within a year.

Profit-Maximizing

A method or strategy executed by a company aiming to achieve the highest possible profit given the constraints it faces.