Consider the Following Hypothetical Scenarios

question 65

Multiple Choice

Consider the following hypothetical scenarios:
Scenario A: You are about to purchase a pair of 7 for All Mankind jeans for $175 and a t-shirt for $45.The sales attendant at the store tells you that the pair of jeans you wish to buy is on sale for $160 at another store, located about a 20-minute drive away.
Scenario B: You are about to purchase a pair of 7 for All Mankind jeans for $175 and a t-shirt for $45.The sales attendant at the store tells you that the t-shirt you wish to buy is on sale for $30 at another store, located about a 20-minute drive away.
Based on standard economic theory, under which scenario would you make the 20-minute trip to the other store?

• A)Scenario A because the pair of jeans is a very expensive item and $15 saving is quite substantial
• B)Scenario B because a $15 saving amounts to a substantial discount (about 33 percent)
• C)in either scenario if I think a $15 savings is worth the 20-minute trip
• D)in none of these scenarios if I think the $15 saving is not worth the 20-minute trip
• E)C and D are correct answers.

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Definitions:

Public Hysteria

A phenomenon where a large group of people display an exaggerated or uncontrollable emotion due to rumors, fear, or a perceived threat.

Media Inquiries

Requests for information or comments from the media, typically handled by an organization’s public relations department.

Government Relations

The management of interactions and communication between an organization and government officials or agencies.

Elected Officials

Individuals who have been chosen through a democratic voting process to hold public office and represent the interests of their constituents.