Why Do Consumers Tend to Gravitate Towards Non-Profit Firms When

question 7

Multiple Choice

Why do consumers tend to gravitate towards non-profit firms when evaluating credence goods?

• A)Consumers like giving to charities
• B)Non-profit firms charge lower prices
• C)Consumers can deduct some or all of the purchase price for tax purposes
• D)Non-profit firms offer goods and services not offered by for profit firms
• E)Consumers believe non-profit sllers will be less likely to skimp on quality for profit.

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Definitions:

Open-market Operations

The buying and selling of government securities by a central bank to control the money supply and interest rates in the economy.

Friedman Rule

A monetary policy rule proposed by economist Milton Friedman, suggesting that the optimal nominal interest rate is zero to eliminate the opportunity cost of holding money.

Deflation

A decrease in the general price level of goods and services, often indicating an economic slowdown.

Inflation

The velocity at which the aggregate price level for goods and services elevates, thereby reducing purchasing capability.