Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 12, Problem 2.6P
To determine
Comparing the two options, based on equity and efficiency.
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Question 2.2. Henry wants to buy a book. The economic perspective suggests that Henry will buy the book if
the book will give him utility.
his income is high.
the marginal cost of the book is greater than its marginal benefit.
the marginal benefit of the book is greater than its marginal cost
Describe an example where prices change people's behavior in efficient manners?
Experiment 1: Reference Pricing a. Place the two products together. Place a sign on one with a low price. Place a sign on the other with a high price (about 50 percent higher will do). Ask your research participants to evaluate the quality of each of the items and to tell which one they would probably purchase. b. Reverse the signs and ask other research participants to evaluate the quality of each of the items and to tell which one they would probably purchase. c. Place the two p<oducts together again. This time place a sign on one with a moderate price. Place a sign on the other with a price that is only a little higher (less than 10 percent higher). Again, ask research participants to evaluate the quality of each of the items and to tell which one they would probably purchase. d. Reverse the signs and ask other research participants to evaluate the quality of each of the items and to tell which one they would probably purchase.
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Principles of Economics (12th Edition)
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