Shopping at a warehouse, such as Sam's Club or Costco, allows its members to pay very low prices on the goods and services they buy. Customers who shop at such a store incur:
A. transaction costs because they must be members to shop there.
B. no transaction costs because they pay prices that are lower than any other location.
C. transaction costs because they must buy a product in bulk.
D. no transaction costs because members can return any item purchased for any reason.
A. transaction costs because they must be members to shop there.
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A lump-sum tax causes the after-tax consumption schedule:
A. and the before-tax consumption schedule to coincide. B. to be steeper than the before-tax consumption schedule. C. to be flatter than the before-tax consumption schedule. D. to be parallel to the before-tax consumption schedule.
Gamble A results in $10 with probability 0.4 and $30 with probability 0.6. Gamble B results in $20 with probability 1. If an individual prefers Gamble A to Gamble B, the independence axiom implies that he prefers Gamble C that gives $0 with probability 0.5, $10 with probability 0.2 and $30 with probability 0.3 to Gamble D that results in $20 with probability 0.5 and $0 with probability 0.5.
Answer the following statement true (T) or false (F)