Which of the Following Is Not a Commitment Device Used

question 9

Multiple Choice

Which of the following is not a commitment device used to overcome a commitment problem?

• A)A non-refundable advance payment to reserve a room at a resort.
• B)A manufacturer's 2-year agreement to fix,at no cost to you,anything that breaks on your computer.
• C)A pre-nuptial agreement that provides for a large penalty in the event a spouse has an affair.
• D)High fines for illegal parking on campus.

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Definitions:

Substitutes

Goods or services that can be used in place of each other, fulfilling similar needs or desires.

Price Elasticity

An indication of the extent to which the demand or supply of a product alters following a variation in its price.

Substitutes

Products or services that can be used in place of each other, where the increase in price of one leads to an increase in demand for the other.

Complements

Items or services used together, where the use of one increases the demand for the other.