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The Green Transfer Co

question 110

Essay

The Green Transfer Co.utilizes a concentration banking system and is determining whether to request wire transfers or depository transfer checks.What would you suggest,given the following: wire transfer saves 3 days of float but increases costs by $45.The current interest rate is 10% annually.Next year,however,technological changes will occur that reduce the float savings to 2 days from 3,and the incremental costs will be reduced to $35.


Definitions:

Marginal Disutility

The added dissatisfaction a consumer experiences from consuming an additional unit of a product or service.

Behavioral Economics

A field of economics that examines how psychological, social, cognitive, and emotional factors affect economic decisions of individuals and institutions.

Anchoring

The tendency people have to unconsciously base, or “anchor,” the valuation of an item they are currently thinking about on recently considered but logically irrelevant information.

Decision Making

The process of selecting the best course of action from several alternatives to achieve a desired goal.

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