A Store Is Choosing Between Advertising a Credit Card Fee

question 68

Multiple Choice

A store is choosing between advertising a credit card fee or a discount for paying cash to its customers.More customers are likely to pay cash if the store owner advertises:

• A) the credit card fee.
• B) the discount for paying cash.
• C) either one; since it's the same outcome, people won't care one way or another.
• D) neither one; since people are not likely to pay cash more regardless of how it's advertised.

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Definitions:

Equilibrium Price

The cost at which the amount of a product consumers want to buy matches the amount producers are willing to sell, leading to a balanced market situation.

Price Ceilings

A government-imposed limit on how high a price is charged for a product.

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity of that good that suppliers are willing to produce and sell.

Demand To Supply

This term reflects the relationship and balance between consumer demand for goods and services and the supply provided by producers.