Many Consumers Are Willing to Pay $100 for a Perfume

question 77

Multiple Choice

Many consumers are willing to pay $100 for a perfume that contains $10 worth of scent because the perfume is from a well-known brand. What does this image pricing suggest about these consumers?

• A) They process prices from left to right.
• B) They use the price as an indicator of quality.
• C) They are rounding up the price.
• D) They are remembering an external frame of reference.
• E) They are breaking the price into smaller units.

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Definitions:

Amortized

Refers to the process of gradually reducing debt through regular payments that cover both interest and principal over a set period.

Compounded Monthly

This process involves the reinvestment of interest, so each month's interest earning is based on the principal plus the previously earned interest.

Amortized

The gradual reduction of a loan or debt by regular payments of both interest and principal.

Compounded Monthly

A method of calculating interest where the accrued interest is added to the principal sum each month, so that each subsequent interest calculation is made on a slightly higher amount.