Joseph Gallo poured two glasses of wine from the same bottle but put a more expensive price tag on one glass than on the other. He let people test both and asked which they wanted; most wanted the more expensive glass, not knowing that both had come from the same bottle. This kind of experiment tells us that:
A. people probably want to drink wine for the sense of indulgence it gives them rather than for the taste.
B. preferences are given and are not shaped by society.
C. people never make rational choices.
D. decision making is costless.
Answer: A
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Elasticity of demand equals the ratio of the percentage change in the price of a good to the percentage change in the quantity demanded
a. True b. False Indicate whether the statement is true or false
If the price of a product increases, then
A) the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, decreases. B) the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, increases. C) the budget line shifts outward and the optimal quantity demanded, which corresponds to the higher price, decreases. D) the budget line shifts inward and the optimal quantity demanded, which corresponds to the higher price, increases.