Steve Goes to the Store to Buy a Radio

question 3

Multiple Choice

Steve goes to the store to buy a radio. The store has two different models available, both of very good quality and at reasonable prices. Nevertheless, Steve buys neither. Given what we know about decision-making, the most promising explanation is that Steve:

• A) couldn't find a persuasive reason for buying one radio rather than the other, so he bought neither
• B) changed his mind in the store and decided he didn't want a radio after all
• C) calculated the expected utility of further shopping and decided that that was his best option
• D) realized that the utility of each radio was lower than its purchase price, making the radios unappealing

---

Definitions:

Lag

A delay between an action and its effect or between two related events.

Federal Open Market Committee

The branch of the Federal Reserve Board that determines the direction of monetary policy in the United States.

Federal Reserve

The Federal Reserve is the central banking system of the United States, responsible for monetary policy, regulation of financial institutions, and ensuring stability of the financial system.

Monetary Policy

The process by which a government, central bank, or monetary authority manages the supply of money and interest rates to achieve specific economic objectives.