Gabriella Sax Believes That Customers in Her Dress Shop Find

question 76

Multiple Choice

Gabriella Sax believes that customers in her dress shop find certain prices very appealing. Between these price levels, all prices are seen as roughly the same-and price cuts in these ranges generally do not increase the quantity sold (i.e., the demand curve tends to drop vertically within these price ranges) . Therefore, Sax prices her items as close as possible to the top of each such price range. This is:

• A) bait pricing.
• B) prestige pricing.
• C) leader pricing.
• D) psychological pricing.
• E) odd-even pricing.

Understand how government interventions like taxes and subsidies impact market efficiency and resource allocation.

Identify the conditions necessary for a market to achieve allocative efficiency.

Explain the concept of efficiency loss (deadweight loss) and its causes in a market.

Distinguish between positive and negative externalities and their impact on social welfare.

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Definitions:

Carbon Dioxide

A colorless, odorless gas produced by burning carbon and organic compounds and by respiration. It is naturally present in the air and is absorbed by plants in photosynthesis.

Baking Soda

A chemical compound also known as sodium bicarbonate, used in baking as a leavening agent and for cleaning.

Coffee

A brewed drink prepared from roasted coffee beans.

Denatures

The process by which proteins lose their three-dimensional structure and function due to factors like changes in pH or temperature.