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.
Answer: D
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Refer to Excise Subsidy. Which areas count as part of the measure for both consumer's surplus and producer's surplus?
The following questions refer to the accompanying diagram which shows the effects of an excise subsidy given to firms. The initial price and quantity are P0 and Q0, respectively. After the subsidy is granted, the equilibrium quantity is Q1, firms receive the price Ps, and consumers pay the price Pd.
a. areas A, B, E and H.
b. areas B, E and F.
c. areas B and E.
d. no areas can count as part of the measure for both.
The more elastic the demand for the good labor produces, the less elastic the demand for labor.
Answer the following statement true (T) or false (F)