Question

1a)When you purchase low-cost goods repeatedly, you usually use ____ (internal search or external search); when you purchase expensive goods for the first time, you usually use _____ (internal search or external search).

b)After you recognize a need, the next step is to evaluate alternatives before making a purchase. (True or False)

c)You have saved enough money to buy a $800,000 house, this is ______ (needs, wants, or demands). A basic shelter is _____ (needs, wants, or demands). A multi-million-dollar house is _____ (needs, wants, or demands).

d)According to information theory, you would search for information until cost of additional search ____ (>, =, or <) expected savings from additional search.

e)You are a long-time smoker and you understand that smoking is not healthy. You tell yourself there are many smokers who don’t get cancer, so you will be fine. Then you continue smoking 2 packs a day. This is an example of ______.

f)You decide to buy a $50,000 car instead of investing in a mutual fund that earns 7% return, the mutual fund is an example of _____ (incremental cost, opportunity cost, or sunk cost). You have paid $800 for a 12-week art class, you feel this class is not good after 4 weeks, however, you have passed the deadline for a refund, so you decide to continue attending the class, this is an example of _____ (incremental cost, opportunity cost, or sunk cost).

g)One way to prevent impulse buying is to wait 3 days to cool down before making the purchase (or not) decision. (True or False)

h)H&M has a promotion for T-shirts – buy two get one free. This is ____ (first degree, second degree, or third degree) price discrimination.

i)You must fly to New York for a job interview on Thursday. Your price elasticity of demand is ___ (high or low), so you are willing to pay ____ (higher or lower) price for airline ticket.

j)Gasoline has a ____ (high or low) price elasticity of demand due to the lack of alternatives.

Answer 1

1.a) When you use low cost goods repeatedly, you usually use internal search; When you purchase expensive goods for the first time, you usually use external search.

b) Statement is true

c) You have saved enough money to buy a house of $ 800000, this is demand( because i want this house and able to pay) . A basic shelter is need( because basic shelter is our necessary requirement). A multi- million- dollar house is our want( because this is what we want to make our life luxurious).

d) >

e) addiction

f) opportunity Cost. Sunk cost

g) True

h) second degree

I) low, higher.

j)high