In a Survey of Consumers, Daniel Kaheman, Jack Knetsch and Richard

question 257

Multiple Choice

In a survey of consumers, Daniel Kaheman, Jack Knetsch and Richard Thaler asked their opinion of a hardware store's decision to

• A) go out of business because a larger hardware store opened in the same city; 82 percent of those surveyed believed it was unfair for the larger store to compete with the smaller store.
• B) raise the price of snow shovels the day following a snowstorm; 82 percent of those surveyed believed this was unfair.
• C) sell tickets to sporting and cultural events at prices higher than prices paid at the ticket windows for the same events; 82 percent of those surveyed believed this was unfair.
• D) remain in business even though the store was not making an economic profit; 82 percent of those surveyed believed it would be unfair for the store to go out of business if there no other hardware stores in the same area.

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Definitions:

Conversion Costs

The combined costs of direct labor and manufacturing overhead involved in converting raw materials into finished products.

Weighted-Average Method

A cost accounting method that assigns an average cost to each unit of inventory by weighting the costs of similar items.

Work in Process Inventory

The cost of partially finished goods that are still in the production process at the end of an accounting period.

Units Completed

is a measure of the number of finished units produced within a given period, reflecting the productivity or output level.