Consider the Following Scenario When Answering the Following Questions

question 120

Multiple Choice

Consider the following scenario when answering the following questions:
Suppose a large electronics retailer has 1,000 salespeople who sell new computers and new computer service plans.The retailer is interested in increasing the percentage of customers who purchase a computer service plan (or warranty) with their new computer.The retailer decides to test two sales pitches by splitting its salespeople into two groups of 500 and giving each group a slightly different sales pitch to recite to customers prior to the consummation of a computer sale.
The first group of salespeople recites the following sales pitch: "Before you pay,I wanted to let you know that all of our new computers come automatically with a warranty that adds $150 to the purchase price.If you wish to opt out and decline the warranty,all you need to do is fill out and sign a form attesting to your refusal."
The second group of salespeople recites the following sales pitch: "Before you pay,I wanted to let you know that,although none of our new computers come automatically with a warranty,you can purchase one by adding $150 to the purchase price.If you wish to opt in and accept the warranty,all you need to do is fill out and sign a form attesting to your acceptance."
-Suppose that 84 percent of customers hearing the sales pitch from the first group purchased the warranty and that 19 percent of the customers hearing the sales pitch from the second group purchased the warranty.The managers concluded that ________ were likely present and changed company policy such that all salespeople are required to recite the sales pitch given by the first group.

• A) fairness effects
• B) rational effects
• C) electronic aptitude effects
• D) concerns about fairness
• E) framing effects

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Definitions:

Cost Of Capital

The rate of return a company must earn on its investments to maintain its market value and attract funds.

Lump Sum

A one-time payment made for a particular purpose, rather than recurring payments over time.

Future Value

The amount of money an investment is expected to grow to over a period of time when interest or dividends are reinvested.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.