Terrell Is Shopping for a New Car, and the Saleswoman

question 124

Multiple Choice

Terrell is shopping for a new car, and the saleswoman wows him by emphasizing the fact that he can have the car with a two thousand dollar rebate. She also mentions the offer of zero percent financing for 72 months, but she does not really press that as a great option. Terrell has become convinced that the rebate is going to be the better deal, even though he'd actually save much more money with the no-interest financing. The saleswoman has used framing, but Terrell is falling prey to the effects of __________

• A) intuition.
• B) anchoring.
• C) the representativeness heuristic.
• D) the availability heuristic.

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Definitions:

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of accounts receivable, inventories, and meeting short-term liabilities.

Discount Size

Pertains to the magnitude or amount of reduction in price offered on goods or services, often used as a sales promotion technique to increase consumer demand or clear inventory.

Maturity Period

The duration or lifetime until a financial instrument, such as a bond or loan, is due to be repaid in full.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the total amount loaned.