Question 1

It has be said that people would never build a house if they had to go to the lumberyard and buy the framing lumber and each building material by the piece.Where did such a notion come from? Might it be true?

Accepted Answer

The answer of It has be said that people would...

Question 2

Bounded rationality effects people in more ways than simply expenditure patterns.Think of ways in which your behavior is bounded so that it appears irrational at times.Be careful not to lump together concepts that are discussed in Chapter 8 under other names.Is bounded rationality a good or bad thing in your view?

Accepted Answer

The answer of Bounded rationality effects people in more ways...

Question 3

According to the textbook, an efficient manager will be one who:
A)Does not have the tendency to put too much weight on recent performance
B)Has the tendency to put too much weight on recent performance
C)Who never considers recent performance
D)Only considers recent performance.

Accepted Answer

An efficient manager should not have the tendency to put too much weight on recent performance alone. While recent performance is important, a good manager needs to consider past performance as well as other factors such as the individual's contributions to the team and company. Only considering recent performance may lead to unfair evaluations and decisions.

Question 4

The Weber-Fechner law says that just noticeable difference in a stimulus tends to be:
A)smaller the more intense the stimulus is
B)larger the more intense the stimulus is.
C)unrelated to the intensity of the stimulus
D)larger than the stimulus

Accepted Answer

The Weber-Fechner law states that the just noticeable difference (JND) is proportional to the intensity of the stimulus, meaning it becomes larger as the stimulus intensity increases.

Question 5

According to Kahneman and Tversky's value function, which of the following gifts provide higher total values:
A)4 different gains of $25 each
B)2 different gains of $50 each
C)1 gain of $100 each
D)All provide exactly the same value

Accepted Answer

Kahneman and Tversky's value function, part of prospect theory, suggests that people derive more satisfaction from multiple smaller gains than from a single large gain of equivalent total value. This is because the value function is concave for gains, indicating diminishing sensitivity as gains increase. Therefore, 4 different gains of $25 each would provide higher total value than the other options.

Question 6

Judgmental heuristics indicate that people are more influenced by the present than the past.Develop a critique of this suggestion in your text.

Accepted Answer

The answer of Judgmental heuristics indicate that people are more...

Question 7

Suppose a rational consumer faced with a choice between blue pencils and red pencils will always choose the red ones.If she is also offered a choice of green pencils then
A)She will always choose the green ones
B)She will change her mind and choose the blue pencils
C)She will continue to choose the red pencils
D)May choose either the blue or the red pencils

Accepted Answer

The answer of Suppose a rational consumer faced with a...

Question 8

According to the text, the procedure of "anchoring and adjustment":
A)Often leads to biased estimates
B)Usually leads to correct estimates
C)Occurs only when the "anchor" is completely related to the value to be estimated
D)Explains why people tend to succeed at new business ventures

Accepted Answer

The text states that the procedure of "anchoring and adjustment" often leads to biased estimates.

Question 9

Suppose you have tickets to tonight's concert.Nevertheless, you are also in bed with a very high fever.In considering weather to go to the concert or not, a rational consumer should:
A)Go to the concert if the price you paid for the tickets is very high
B)Stay in bed if the price of the tickets is very low
C)Go to the concert if the value of the concert for you offset the discomfort of getting out of bed
D)stay in bed if the fever is the discomfort of getting out of bed is too high

Accepted Answer

A rational consumer should consider the opportunity cost of going to the concert while being sick. Going to the concert may worsen their condition and potentially even harm others. However, if the value of the concert outweighs the discomfort and potential risks, then it may be rational to attend. Thus, the best choice in this scenario would be to go to the concert only if the value of the concert for the consumer offsets the discomfort of getting out of bed while being sick.

Question 10

My golfing friends and I were having a tough time trying to figure out whether to go on our annual summer golf outing in June or August this year.Both had their advantages.Then some non-teacher in the group wondered if September would be possible.Since that was after the start of school, the teachers in the group immediately came to a decision to go in August.Explain why the September dates suddenly made August the clear choice.

Accepted Answer

The answer of My golfing friends and I were having...

Question 11

Say you are at the bar trying to decide which drink to buy. The waiter informs you they have two drinks available: red wine and stout beers. Since you like red wine much more than beer, you decide to order wine. Nevertheless, as you prepare to inform the waiter your decision he tells you that they also have Pale Ale beers, and you happened to like stouts much more than pale ales. If we take into consideration the halo effect you are probably going to order:
A)the red wine
B)the stout
C)the pale ale
D)a completely different drink

Accepted Answer

According to the halo effect, our overall impression of a person or thing influences our feelings and thoughts about its character or properties. In this case, since the person likes stout more than pale ales, the halo effect will likely make them choose stout over pale ale, even though they originally preferred red wine. Therefore, the best choice is to order the stout beer.

Quiz 8: Cognitive Limitations and Consumer Behavior

It has be said that people would never build a house if they had to go to the lumberyard and buy the framing lumber and each building material by the piece.Where did such a notion come from? Might it be true?

According to the textbook, an efficient manager will be one who:

The Weber-Fechner law says that just noticeable difference in a stimulus tends to be:

According to Kahneman and Tversky's value function, which of the following gifts provide higher total values:

Judgmental heuristics indicate that people are more influenced by the present than the past.Develop a critique of this suggestion in your text.

Suppose a rational consumer faced with a choice between blue pencils and red pencils will always choose the red ones.If she is also offered a choice of green pencils then

According to the text, the procedure of "anchoring and adjustment":

Suppose you have tickets to tonight's concert.Nevertheless, you are also in bed with a very high fever.In considering weather to go to the concert or not, a rational consumer should: