Fred Just Purchased an Expensive New Refrigerator and Is Considering

question 168

Multiple Choice

Fred just purchased an expensive new refrigerator and is considering purchasing the overpriced warranty. In making his decision on the warranty, Fred ignores better ways that his money could be spent, including paying off high-interest credit card debt. According to prospect theory, the process that leads Fred to ignore the debt and buy the overpriced warranty is

• A)framing bias.
• B)anchoring.
• C)mental accounting.
• D)confirmation bias.

Understand the concept of demographic characteristics and their impact on marketing strategies.

Recognize and evaluate the impact of regulatory forces on industry practices and strategies.

Identify the process and importance of environmental scanning in adapting to market changes.

Differentiate between various environmental forces (social, economic, technological, competitive, and regulatory) affecting marketing strategies.

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Definitions:

Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s initial cost.

Residual Income

The amount of income that an entity generates after accounting for the cost of capital, indicating profitability beyond the minimum required return.

Investment Opportunity

A potential financial venture or asset that could generate income or appreciate in value over time.

Combined

Refers to the amalgamation or integration of two or more elements into a single unit or system.