Reference no: EM133442333

Question 1. Price is the one of the most important elements in economics. Yet When consumers are faced with many alternatives, they often experience choice overload which increases anxiety and hinders decision-making. In an attempt to reduce this anxiety, consumers tend to simplify the process by selecting only a couple of criteria (say price and quantity) to determine the best value for money. Consider the decoy effect - a phenomenon whereby consumers change their preference between two options when presented with a third option. What happens in odd pricing when the decoy effect is introduced?

Question 2. Consider that America was founded on the principle of free trade and freedom of competition. Hence, regulation exists to preserve competition and the freedom for smaller companies to enter the market. If one company controls the market share, smaller groups will never be able to flourish. Should the purpose of government regulation be aimed at protecting competition or protecting the consumer? Thoughts?