The Story in the Text About Playing Tennis Outside Even

question 29

Multiple Choice

The story in the text about playing tennis outside even though you paid for an inside court illustrates which of the following?

• A)Psychologically, people often do not treat sunk cost as irrelevant to a decision.
• B)Rational choice analysis is what comes naturally to most people.
• C)People will make efficient decisions without knowing what they are doing.
• D)All of these are implied by the tennis court story.

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Definitions:

Consumption

Consumption encompasses the acquisition and use of goods and services by households to satisfy their needs and wants.

Induced Consumption

Consumer spending that is influenced by changes in income, differentiating from autonomous consumption which does not vary with income.

Disposable Income

The liquidity households have for spending and saving, after income taxes have been deducted.

Consumption

The act of using goods and services by households that leads to a decrease in their availability.