Brett's reservation price for a 1957 Plymouth Fury in mint condition is $2,500. Which of the following is false?
A)If the price of gasoline were to drop by $.50 per gallon, it is likely that Brett's reservation price would increase.
B)The price Brett pays would include storage costs.
C)If Brett paid $2,500 for such a car, he would be on the same indifference curve as he would have been if he had not bought the car.
D)Brett would buy such a car for $2,000.

Question

Quizplus · Accepted Answer

The price Brett pays would not include storage costs, as those would be separate fees charged by the seller or storage facility. A is true because if the price of gasoline drops, Brett may be willing to pay more for a car that gets poor gas mileage. C is false because if Brett buys the car for $2,500, he would be on a higher indifference curve than if he did not buy the car. D is false because Brett's reservation price is $2,500, so he would not buy the car for $2,000.

Brett's Reservation Price for a 1957 Plymouth Fury in Mint