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:

Market Transaction

An exchange of goods, services, or financial assets in return for money between parties within a marketplace.

Emission Control Devices

Technologies or equipment installed on vehicles or industrial plants to reduce pollutants released into the atmosphere.

External Costs

Costs that are not borne by the parties involved in an economic transaction but by other individuals or society at large.