When Consumers in a Market Become Fully Informed of Negative

question 1

Multiple Choice

When consumers in a market become fully informed of negative information about the product, we can expect the

• A) price of the product to decrease.
• B) price of the product to increase.
• C) price of the product to remain constant but the equilibrium quantity to decrease.
• D) equilibrium quantity of the product to increase.

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Definitions:

Omission Bias

The tendency to judge harmful actions as worse, or less moral, than equally harmful inactions (omissions).

Status Quo Bias

The tendency for individuals to prefer for things to stay the same by doing nothing or by sticking with a decision made previously.

Default Option

A pre-selected choice among a set of options that will be applied if no alternative is specified by the decision-maker.

Action

The act of doing something or taking steps towards achieving an outcome.