Studies on consumer behavior have found that most people value fairness enough that they will refuse to participate in transactions they consider unfair, even if they are worse off as a result. How does this affect a firm's decision to raise prices in
the event of a temporary increase in demand?
What will be an ideal response?
If the firm chooses to raise prices, consumers will consider this price increase unfair and might choose to buy elsewhere. This loss of consumer goodwill could lead to lower profits in the long run. It is rational for firms to forgo raising prices in the short run to keep customers happy. This can lead to increased profits in the long run.
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A wage tax in a labor market with a perfectly inelastic labor supply curve is efficient.
Answer the following statement true (T) or false (F)
Monetary and price instability will
What will be an ideal response?
Seignorage is defined as which of the following?
A) the part of a budget deficit financed by the issuance of bonds sold to the private sector B) revenue from money creation C) the increase in income tax revenues that occurs during a hyperinflation D) the increase in income tax revenues that occurs as a result nominal income tax brackets not being adjusted to changes in E) the part of a budget deficit financed with foreign lending
Dividing the number of households making over $80,000 by the number of households making less than $20,000 will produce the 80/20 ratio.
Answer the following statement true (T) or false (F)