If a Commercial Advertises a Prescription Drug by Emphasizing the Possible

question 22

Multiple Choice

If a commercial advertises a prescription drug by emphasizing the possible benefit of this drug rather than the numerous side-effects of its use, which of the following would best describe the effect that the advertisers are utilizing?

• A) Framing
• B) Anchoring and adjustment
• C) Illusory correlation
• D) Wishful thinking

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Definitions:

Flotation Costs

These are expenses incurred by a company when it issues new securities, including underwriting fees, legal fees, and registration fees.

Retained Earnings

Profits that a company keeps, after dividends are paid, to reinvest in the business or to pay off debt.

Constant Growth

A model assuming that dividends, earnings, or other financial metrics grow at a steady, unchanging rate indefinitely.

Balance Sheet

A financial statement showing a company's assets, liabilities, and equity at a specific point in time, providing a snapshot of its financial condition.