Some Marketers Offer Consumers Making a Relatively Expensive Purchase, the Option

question 86

Multiple Choice

Some marketers offer consumers making a relatively expensive purchase, the option of buying a second, related item for a marginal additional fee. For example, a fashion boutique is offering cashmere coats for sale at $500 each. However, for an additional $25 buyers can also obtain a matching scarf. The uptake rates on such offers is generally good because it is believed that consumers prefer to absorb the cost of the second item into a single purchase, rather than process the cost of the second item separately. This phenomenon is BEST explained by which of the following concepts from behavioural economics?

• A) Segregated losses
• B) Integrated losses
• C) Segregated gains
• D) Integrated gains
• E) none of the above

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Definitions:

Steady Income

Regular and consistent earnings from employment, investments, or other sources.

Corporations

Legal entities that are separate from their owners, providing limited liability protection, and having the ability to enter into contracts, sue, and be sued.

Steady Income

A consistent flow of earnings or money, typically on a regular basis, which can be relied upon for financial planning.

Bankruptcy Procedure

The legal process under bankruptcy laws for dealing with the debt of individuals or entities that cannot pay their creditors.