Asked by Brian Henry on Jul 27, 2024
Verified
The reason why so many price tags end in 95 or 99 is based on the understanding that consumers tend to overemphasize:
A) the first digit of prices.
B) the last two digits of prices.
C) the attractiveness of prices stated in cents.
D) the savings associated with even one cent.
Price Tags
Labels on goods indicating their cost.
Consumers
Individuals or groups who use goods and services generated within the economy.
First Digit
The initial number in a sequence of digits, often discussed in the context of Benford's Law which predicts the distribution of first digits in many real-life sets of numerical data.
- Identify prevalent biases impacting consumer choices and understand the significance of anchoring in decision-making processes.
Verified Answer
CW
Caleb WeinmannJul 28, 2024
Final Answer :
A
Explanation :
The psychological pricing strategy where prices end in 95 or 99 cents is based on the belief that consumers pay more attention to the first digit of a price than the following digits, making a product priced at $4.99 seem significantly cheaper than one at $5.00, for example.
Learning Objectives
- Identify prevalent biases impacting consumer choices and understand the significance of anchoring in decision-making processes.