Question

Which of the following is not a common mistake made by consumers? the failure to take into account the implicit costs of an activity the failure to ignore sunk costs being overly optimistic about their future behavior being overly pessimistic about their future behavior

Answer 1

ANSWER: The correct answer is D that is being overly pessimistic about their future behaviour and the reason is that consumers take into account monetary costs but make three mistakes which are:

1) they ignore opportunity costs that is implicit costs as they don't realize where else they could have spend their money if not on the particular product.

2. they ignore sunk costs that is the cost of going to purchase a particular product like travelling fare.

3. not realistic about their future behaviour that is overly optimistic that is benefits that could bring them into the future rather then being realistic as what could the product achieve in present or the near future instead of distant future.