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- Section 4, Question 22
Economist: Gifts of cash or gift cards, which(64 more words not shown)
Which one of the following,(8 more words not shown)
- AThe rate at(16 more words not shown)
- BGifts of cash(13 more words not shown)
- CPeople in the(26 more words not shown)
- DPeople are unwilling(20 more words not shown)
- EMost retailers require(10 more words not shown)
Reading the argument
I'd rather receive $20 than a $20 shirt I will never wear. But a gift can also show that someone thought carefully about me. That personal element might matter even when I wouldn't have bought the item myself.
The study asks what people would have been willing to pay for their gifts, and their answers average about two-thirds of the actual price. My first thought might be that they're simply bad at guessing prices. But that isn't what they were asked. Willingness to pay is their own purchasing decision, not an estimate of the store's price. We can't dismiss the evidence by treating it as a price-guessing exercise.
What we’re looking for
The economist uses that evidence to conclude that recipients value cash or gift cards more. For the weakener, we need evidence against that preference claim. Keep the conclusion separate from the narrower result about what people would pay.
Working the answers
- A
More returns over time don't show that recipients prefer gifts chosen for them over cash. Returns might reflect dissatisfaction with the gifts, but the answer doesn't even establish why the returns occur. It gives a historical trend rather than evidence against the comparison the economist makes.
- B
How often people give cash or gift cards doesn't establish how recipients value them. Givers could choose something less popular with recipients for their own reasons. A small share of gift giving isn't proof of a low value to the people receiving gifts.
- C
A close friend might choose a gift someone likes more than a distant acquaintance's gift. That comparison is between two kinds of selected gifts, not between selected gifts and cash. People could value the close friend's choice more while still preferring cash to either. C doesn't settle the relevant comparison.
- DCorrect
This gives us another way to assess value: what recipients require before they will give the gift up. They won't sell unless offered about one and a half times its actual price. That challenges the idea that their low willingness to buy the item captures how much they value having received it.
Imagine a pen that cost $5 but was a thoughtful gift from someone close to you. If you won't part with it for less than $7.50, the $5 purchase price doesn't capture your attachment to it. Sentimental value could explain the difference; D doesn't require us to prove that is the psychological cause. The important point is that the selling threshold provides counterevidence to the economist's account of what recipients value. It doesn't establish that every person prefers every chosen gift to cash.
- E
A receipt requirement restricts how someone can return a gift. It doesn't tell us whether the recipient values the gift more or less than cash. Retailers' procedures don't supply the missing evidence about recipients' preferences.
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