Why might it be bad for hotels to not

charge higher prices when rooms are in

higher demand?

a. Arbitrageurs might establish a black

market by reserving rooms and then

selling the reservations to customers.

b. Rooms may be rationed.

c. Without the profit from these high

demand times, hotels would have less

of an incentive to build or expand,

making the long-run scarcity problem

even worse.

d. All of the above.


. The rational-actor paradigm assumes that

people do NOT

a. act rationally.

b. use rules of thumb.

c. act optimally.

d. act self-interestedly.