Question

Since high-end retailers place their most expensive products right in the entryway of the store, where consumers will see them first, and place their more popular, better-selling items further back. Which of the following would most likely be used by a behavioral economist as a justification for this strategy?

• Consumers are motivated by a reference price only

• Consumers are motivated by a comparison of the price level of a good to a reference price.

• Consumers are motivated by the actual price level only.

• A behavioral economist would disagree with the store’s strategy.

Thank you!

Answer 1

Ans) the correct option is Consumers are motivated by a comparison of the price level of a good to a reference price. A reference price a price with which other prices are compared. their more popular, better-selling items are put further back because the demand for these goods are already built and their most expensive products right in the entryway of the store, where consumers will see them first Consumers are motivated by a comparing the price level with a reference price.