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Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406

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BuyFindarrow_forward

Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406
Textbook Problem

Summarize David Friedman’s explanation of the endowment effect.

To determine

Explain the endowment effect.

Explanation

The endowment effect is an outcome that occurs when people place a higher value on something simply because they own it; for example, if P wishes to buy the good X, and P is ready to pay maximum $10 for it. After purchasing the good X at $10, P says that the lowest price that he would sell is $11. This is the endowment effect; here, people get a price from a good simply due to they own it...

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