One Possible Reason as to Why Consumers Respond to Sales

question 251

True/False

One possible reason as to why consumers respond to sales is that by displaying a "high" regular price and a "low" sale price, sales provide consumers with a reference point to interpret the prices being offered.

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Definitions:

Exogenous

Factors or influences arising outside of a system that affect a model or process, without being affected in turn by that system.

Demand Shock

A sudden event that increases or decreases demand for goods or services in an economy, often leading to changes in prices and output.

Expansion Phase

A period in the business cycle when the economy moves from a trough to a peak, characterized by an increase in economic activity, production, and employment.

Prosperity

A state of economic well-being characterized by financial success, growth, and good fortune, where living conditions and quality of life are improved.