Question

40. Which of the following supermarket strategies to increase sales would be most consistent with a behavioral economics (versus neoclassical economics) approach? A. Distributing online coupons. B. Providing discounts for buying in bulk. C. Positioning frequently purchased items at the back of the store. D. Offering price matching with other stores.

41. According to behavioral economists, the human brain frequently employs heuristics because: A. people have consciously trained their brains to do so. B. these shortcuts minimize errors in decision making. C. they produce more optimal outcomes than do rational calculations of benefits and costs. D. they save energy and time in decision making.

42. According to prospect theory, what strategy will firms typically employ with regard to pricing and packaging of their goods, when faced with rising production costs? A. Firms will increase both package sizes and prices but will increase prices more to communicate to consumers that the product has greater value. B. Firms will reduce package sizes but keep prices the same, thus increasing the per unit price of the good. C. Firms will keep package sizes the same but lower prices and attempt to cover the higher costs with greater revenue. D. According to prospect theory, the choice of strategy doesn't matter, as consumers are generally able to recognize price increases regardless of what form they take.

43. Josh will receive a salary of $300,000 next year. According to prospect theory: A. Josh will be happy with that amount regardless of what he has made in the past. B. Josh will only be happy with that salary if everyone else around him makes less than he does. C. Josh will only be happy with that salary if his cost of living has not increased. D. Josh's satisfaction with that salary depends on how much he made in the past.

44. Why do credit card companies typically require small minimum payment amounts on their customers' monthly credit card statements? A. Credit card companies are concerned that their customers will be put in financial distress if required to make higher payments. B. Credit card companies want to promote faster repayment, and customers will be encouraged to pay more each month if they're able to pay well beyond the minimum. C. Credit card companies want to increase profits by promoting slower repayment, and actual customer payments will be anchored by the smaller payment requirements. D. Credit card companies actually charge the highest minimum payment they are allowed by law to charge.

Answer 1

40.

Correct Answer:

C

Positioning frequently purchased items, helps consumers recognize it and sales is created at the store. It is the example of behavioral approach.

====

41.

Correct Answer:

D

It is done by the consumers because it helps them take fast decisions and select best possible alternatives within the limited time frame. So, it is the heuristic approach in their brain that is going to help them.

====

42.

Correct Answer:

B

It will make the consumers pay the same price as they had paid last time, without giving attention that quantity of the product has decreased. So, is about managing production cost, while offering products in smaller quantity at the same price to the consumers.

====

43.

Correct Answer:

C

It is the aim to achieve by the prospect theory that people get happier when income is more than the expenses and it is the case with Josh.

====

44.

Correct Answer:

C

It is the approach by credit card companies to maximize the profits at their end by promoting consumers to pay slowly.