Why do many film processing companies have a policy of printing every picture on a roll of film or a memory card, even if the picture is very fuzzy and customers are allowed to ask for refunds on any pictures they do not like?
What will be an ideal response?
The processing companies are taking advantage of the tendency of consumers to ignore nonmonetary costs. They are relying on the fact that passing up a refund once the picture has already been paid for is a nonmonetary opportunity cost rather than a direct monetary cost, and as a rule, customers rarely do ask for refunds.
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Because of the relationship between an asset's real rate of return and its risk, one would expect to find all of the following, except one. Which one?
A) Corporate stocks have higher rates of return than U.S. Treasury bonds. B) Corporate stocks have higher rates of return than U.S. Treasury bills. C) Corporate stocks have higher rates of return than corporate bonds. D) Stocks of smaller companies have higher expected rates of return than stocks of larger companies. E) Mutual funds including stocks of companies in politically volatile developing countries do not have as high a rate of return as mutual funds restricted to stocks of companies in developed economies.
Which of the following events would cause an upward movement along the demand curve for olives? a. The number of people who purchase olives decreases
b. Consumer income decreases, and olives are a normal good. c. The price of pickles decreases, and pickles are a substitute for olives. d. The price of olives rises.
The large increase in the excess reserves held by the commercial banking system during the second half of 2008,
a. increases the likelihood of a sharp contraction in the money supply, which would increase the length and severity of the recession. b. increases the likelihood of a rapid increase in the money supply, potentially leading to future inflation. c. is merely a continuation of the trend present since 1990. d. reduces the ability of banks to extend additional loans.
Some economists, called supply-siders, argue that changes in the money supply exert a strong influence on aggregate supply
a. True b. False Indicate whether the statement is true or false