Economists Have Used the Ultimatum Game and the Dictator Game

question 279

Multiple Choice

Economists have used the ultimatum game and the dictator game in experiments designed to determine

• A)whether consumers care about fairness when they make decisions.
• B)whether consumers believe it is fair for producers to raise the price of a product for which there is excess demand.
• C)whether consumers understand the difference between implicit costs and explicit costs.
• D)whether consumers understand the rule of equal marginal utility per dollar spent.

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Definitions:

Unlevered Firm

A business that operates without any debt financing, using only equity for its operations and investments.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost.

Homemade Leverage

The use of personal borrowing to adjust the overall level of financial leverage that an individual utilizes in their investments.

Capital Structure

Describes the mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, used to finance its overall operations and growth.