You Are Watching TV Late One Night and See an Ad

question 57

Short Answer

You are watching TV late one night and see an ad from Ronco for the Dial-o-matic food slicer.You learn that the Dial-o-matic sells for $29.95.But wait,there's more! Ronco is also including in this deal a set of Ginsu steak knives worth $10.95 and another free gift worth $7.95.Assuming that there is a competitive market for Ronco items,at what price must Ronco be selling this three item Dial-o-matic deal to insure the absence of an arbitrage opportunity and uphold the Law of One Price?

---

Definitions:

Psychodynamic Therapy

A therapeutic approach focusing on unconscious processes as they are manifested in a person's present behavior, with an emphasis on the therapeutic relationship.

Behavioral Activation

A therapeutic approach that seeks to help individuals overcome depression by encouraging engagement in positively reinforcing activities.

Behavioral Contingency Management

A therapeutic approach that modifies behavior by altering the consequences, typically through rewards or punishments, contingent on the behavior's occurrence.

Behavioral Cognition

The study of the relationship between an individual's thoughts, emotions, and behaviors.