Prospect Theory in Behavioral Economics Predicts That as the Price

question 261

Multiple Choice

Prospect theory in behavioral economics predicts that as the price of flour increases, bakeries will try to avoid turning off their buyers by

• A) increasing the unit prices of their products.
• B) reducing the unit sizes of their products.
• C) producing more units of their products.
• D) passively accepting lower profits.

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Definitions:

Posting

The process of recording financial transactions in the accounting books, such as a ledger or journal.

Source Documents

Original records that contain the details necessary to support the transactions entered in an accounting system, such as invoices, receipts, or contracts.