Grace Makutsi finally bought a pair of blue shoes that she had been coveting for a long time. In less than a week she discovered that the shoes were uncomfortable. Grace went back to wearing her old pair and stashed away the new pair
When asked by her boss, Mme. Ramotswe, why does she not simply give away the new pair, she said: "But I paid so much for them." Grace's behavior
A) supports the endowment effect which states that ownership of an item makes it more valuable.
B) is rational because the more you pay for an item the more valuable it is.
C) ignores the fact that the purchase price is now a sunk cost and has no bearing on whether she should give them away or not.
D) is rational: she should not discard a valuable item.
C
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What basket of goods is used to construct the CPI?
a. a random sample of all goods and services produced in the economy b. the goods and services that are typically bought by consumers as determined by government surveys c. only food, clothing, transportation, entertainment, and education d. the least expensive and the most expensive goods and services in each major category of consumer expenditures
A principal objective of the World Trade Organization is to
A. Assist in retraining workers displaced by imports. B. Equalize income tax structures in various countries. C. Reduce barriers to trade. D. Protect import-competing producers.
The slope of a production possibilities frontier measures:
A. inefficient production of a good. B. the trade-off in the consumption of one good versus the other good C. how much of the resources must be used in order to produce one the goods. D. the opportunity cost of producing one good in terms of the other good.
Refer to the table below. Which product is a normal good but least responsive to a change in income?
A. Product W
B. Product X
C. Product Y
D. Product Z