Suppose 5,000 Students Were Split into Two Groups of 2,500

question 38

Multiple Choice

Suppose 5,000 students were split into two groups of 2,500.Both groups were first presented with an image of a new high-end pair of shoes produced by UGG,a footwear company.
The first group was given the following statement and then asked the following question: "The normal retail price of these shoes is $200.Would you be willing to pay $125 for them?"
The second group was given the following statement and then asked the following question: "The normal retail price of these shoes is $450.Would you be willing to pay $125 for them?"
Suppose that 13% of the students in the first group answered yes and that 63% of the students in the second group answered yes.It is likely that more students in the second group were willing to pay $125 for the pair of shoes because they were told the normal price was much higher.This is an example of a ________ effect in decision-making.

• A) bootstrapping
• B) market-making
• C) utilitarian
• D) framing
• E) psychosomatic

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Definitions:

Operating Activities

Activities that relate to the primary operations of the company, such as selling products or services.

Dividend Payments

Cash or stock distributions made by a corporation to its shareholders from its earnings.

Borrowed Money

Funds that an individual or organization takes from another party under the condition of returning it back in the future often with interest.

Accounting Communication Process

The system by which financial information is identified, measured, recorded, and communicated to interested parties.