Question : 31) Some economists have argued that path dependence and switching : 1387709

31) Some economists have argued that path dependence and switching costs can lead to market failure. Which of the following is an example of this argument?

A) Costly celebrity endorsements lead many consumers to buy a product even though it is more expensive or less effective than a product that is not endorsed by a celebrity.

B) A consumer who won a lottery for a Super Bowl ticket refuses to sell it for $3,000 even though he would not have paid $3,000 for a ticket if he had not won the lottery.

C) While playing the ultimate game, an allocator decides to share $20 equally with a recipient rather than keep the $20 for herself.

D) VHS video recorders became more popular with consumers than Sony Betamax recorders even though the Betamax recorders embodied a superior technology.

32) All but one of the following have been suggested by some economists as possible consequences of path dependency and switching costs. Which of the following is not a possible consequence of path dependency and switching costs?

A) Consumers may get locked into using products with inferior technology.

B) market failure

C) diseconomies of scale

D) Government intervention may be necessary in affected markets in order to improve economic efficiency.

33) Some economists have suggested that network externalities result in consumers being locked into the use of products with inferior technologies. Economists Stan Leibowitz and Stephen Margolis have studied cases that have been cited as examples of this and found

A) there is no convincing evidence that the alternative technologies were superior.

B) consumers sometimes do become locked into the use of products with inferior technologies.

C) that in all of these cases network externalities resulted in market failure.

D) that consumers use products with inferior technologies when their prices are lower than products with superior technologies.

34) Maurice Allais, Reinhard Selten and Vernon Smith all were awarded the Nobel Prize in Economics in part because

A) of their work with experimental economics.

B) they discovered the first example of a Giffen good.

C) of their work on the substitution and income effects of price changes.

D) they proved that external economies would lead to market failure.

35) ________ is an experiment that tests the significance of fairness in consumer decision making.

A) The fairness challenge

B) The consumer choice paradigm

C) The ultimatum game

D) The Giffen paradox

36) The quantity demanded of tickets to the Super Bowl is always greater than the than the quantity supplied. Which of the following in the best explanation why the National Football League does not raise the price of tickets to the level where the quantity demanded equals the quantity supplied?

A) Raising the price would reduce the demand for tickets; there would then be a surplus and the game would not sell out.

B) The cost of raising the price and printing new tickets would exceed the revenue the NFL would receive from higher ticket prices.

C) The demand for Super Bowl tickets is elastic; raising the price would reduce total revenue.

D) The NFL is concerned that raising ticket prices would be considered unfair.

37) Many airlines have not reduced or eliminated fuel surcharges despite the price of oil dropping. A logical reason for this is that the decline in fuel prices ________ the supply of airline tickets while at the same time the demand for airline tickets ________, so airline ticket prices still increased.

A) decreased; increased

B) decreased; decreased

C) increased; increased

D) increased; decreased

38) During its run on Broadway, the play The Producers regularly sold out all available tickets at the St. James Theater. The theater could have raised ticket prices from $75 to $125 and still sold all available tickets but chose not to do so. The best explanation for this decision is

A) theater owners are unaware of the elasticity of demand for Broadway shows.

B) theater owners do not want to raise their tickets on weekends, when demand is high, and then have to lower prices during the week, when demand is lower.

C) firms sometimes give up profits in the short run to keep their customers happy and increase their profits in the long run.

D) theater owners are not motivated to maximize their profits.

39) All but one of the following economists were awarded a Nobel prize for their contributions to experimental economics and their explorations of the influence fairness has on consumer decision-making. Which economist did not receive a Nobel Prize for this work?

A) Vernon Smith

B) Alan Krueger

C) Daniel Kahneman

D) Maurice Allais

40) In an experiment that employed the dictator game, economists at Cornell University gave student “allocators” the option of dividing $20 in only two ways (a) $18 for themselves and $2 to another student, or (b) $10 for themselves and $10 to another student. What was one result from this experiment?

A) Most allocators chose to give themselves $18 and $2 to the other students.

B) Most of the students who were not allocators did not like having someone else make decisions for them.

C) A majority of the female allocators chose option (a); a majority of the male allocators chose option (b).

D) Most of the allocators apparently valued acting fairly.