Question :
11) Which of the following used to explain why a : 1245188
11) Which of the following is used to explain why a consumer’s willingness to buy Microsoft Office increases as the number of other people who use Microsoft Office increases?
A) network externalities
B) market failure
C) diminishing marginal utility
D) the income effect of a price change
12) A good is path dependent when
A) consumers get utility from consuming goods that others are consuming, such as restaurants.
B) the first technology that was adopted has an advantage over a better technology that came later.
C) people who move location follow the path of people who moved before them.
D) it can only be used in one way.
13) A standard which came to the market first, such as the QWERTY letter layout in typewriters, can become entrenched (this layout is still used in computer keyboards today). What is this phenomenon called?
A) network externalities
B) path dependency
C) sunk cost
D) comparative advantage
14) Many economists do not believe that network externalities lock consumers into the use of products that have technology inferior to other, similar products. These economists believe that
A) consumers are always rational.
B) in practice, the gains from using a superior technology exceed the losses consumers incur from switching costs.
C) there is no good evidence that switching costs exist.
D) the government will prevent products with inferior technology from being sold to consumers.
15) 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
A) shifted the supply curve for airline tickets to the left, and at the same time an increase in demand for airline tickets shifted the demand curve to the right, so prices did not decline.
B) shifted the supply curve for airline tickets to the right, and at the same time a decrease in demand for airline tickets shifted the demand curve to the left, so prices still increased.
C) shifted the supply curve for airline tickets to the right, and at the same time an increase in demand for airline tickets shifted the demand curve to the right, so prices still increased.
D) shifted the supply curve for airline tickets to the left, and at the same time a decrease in demand for airline tickets shifted the demand curve to the left, so prices did not decline.
16) Research by Daniel Kahneman, Jack Knetsch, and Richard Thaler has shown that companies like airlines were explicitly able to include a fuel surcharge in their prices because
A) consumers had no choice but to pay the price of the surcharges due to the lack of competition in the industry.
B) a government-imposed price ceiling on airline ticket prices left the airlines not other way to cover the increase in costs.
C) adding a separate fuel surcharge to the price of airline tickets did not actually increase the price of the tickets.
D) consumers see it as fair for firms to raise prices after an increase in costs.
17) For which of the following products is social influence likely to have the greatest impact?
A) toothpaste
B) restaurants
C) high-blood pressure medication
D) school textbook
18) Jamal, Lawson and Kyle have been standing in line for almost an hour waiting to be served at Kirala, a popular new Japanese restaurant. It is possible that some of the people in line won’t be served at all before the restaurant closes. Which of the following could explain why the restaurant does not simply raise prices high enough to eliminate the lines?
a.In situations where consumption takes place publicly, demand for the product is also influenced by how many other people are buying the product. Consequently, a popular restaurant that increased its prices enough to eliminate lines might find that it had also eliminated its popularity.
b.Firms may sometimes not raise their prices for fear that it violates people’s sense of fairness and might alienate customers.
c.The demand for restaurant meals is relatively elastic and if the firm raise prices it will lower its profits.
A) a only
B) a and b only
C) a and c only
D) a, b, and c
19) Which of the following is an experiment which tests whether fairness is important in consumer decision making?
A) the fair trade principle
B) the ultimatum game
C) the preferential treatment game
D) the behavioral experiment
20) In the ultimatum game, allocators usually offer recipients at least a 40 percent share of the money, and recipients almost always reject offers of less than a 10 percent share. Which of the following does not explain why allocators offer recipients a relatively generous share and why recipients reject meager offers?
A) Fear of arousing outrage and abhorrence could influence economic decisions.
B) People can and often do reject offers that offend their sense of fairness even if doing so means taking a monetary loss.
C) Some people are careful not to engage in economic behavior that might offend and alienate others.
D) Allocators can count on recipients to ignore all considerations except financial benefit.
