Question : 41) Economists have used the ultimatum game and the dictator : 1245191

41) Economists have used the ultimatum game and the dictator game in experiments designed to determine

A) whether consumers care about fairness when they make decisions.

B) whether consumers believe it is fair for producers to raise the price of a product for which there is excess demand.

C) whether consumers understand the difference between implicit costs and explicit costs.

D) whether consumers understand the rule of equal marginal utility per dollar spent.

42) Many people leave their servers tips in restaurants, even when they are not likely to visit the restaurant again. This is evidence that

A) people would rather pay for good service at an inexpensive restaurant than pay higher prices and receive poor service at an expensive restaurant.

B) people enjoy eating at restaurants more than eating at home.

C) people treat others fairly even if doing so makes them worse off financially.

D) there has been an improvement in the service people receive in restaurants over time, partly because the restaurant industry has become more competitive.

43) In their surveys of consumers, Daniel Kahneman, Jack Knetsch and Richard Thaler found that

A) most people considered it unfair for firms to raise their prices because of an increase in their costs, but fair to raise their prices after an increase in demand.

B) most people considered any increase in price to be unfair as it led to an increase in profits.

C) most people believed that low income people were hurt most by increases in prices.

D) most people considered an increase in price by firms following an increase in their costs to be fair but believed it was unfair for firms to raise their prices because of an increase in demand.

44) In a survey of consumers, Daniel Kahneman, Jack Knetsch and Richard Thaler asked their opinion of a hardware store’s decision to

A) go out of business because a larger hardware store opened in the same city; 82 percent of those surveyed believed it was unfair for the larger store to compete with the smaller store.

B) raise the price of snow shovels the day following a snowstorm; 82 percent of those surveyed believed this was unfair.

C) sell tickets to sporting and cultural events at prices higher than prices paid at the ticket windows for the same events; 82 percent of those surveyed believed this was unfair.

D) remain in business even though the store was not making an economic profit; 82 percent of those surveyed believed it would be unfair for the store to go out of business if there no other hardware stores in the same area.

45) A network externality refers to a situation in which the usefulness of a product decreases with the number of consumers who use it.

46) Economists have shown that when the ultimatum game experiment is carried out, both allocators and recipients act as if fairness is important.

47) The iPod is a product without any significant network externalities.

48) The ultimatum game and the dictator game are used in economic experiments to test whether fairness is an important influence on consumer decision-making.

49) Results of the ultimatum game indicate that most people value fairness enough that they will refuse to participate in a transaction they consider unfair, even if they are worse off financially as a result.

50) A network externality causes firms to sacrifice profits in the short run in order to satisfy their customers and increase their long-run profits.