Many firms use odd pricingcharging prices such as .99 instead of 1.00 and 9.99 instead of 10.00.
One reason for this pricing strategy is that consumers will somehow believe that the difference in price appears to be greater than it actually is. Researchers conducted consumer surveys to determine whether this is actually the case. What was the result of these surveys?
A) The survey results were inconclusive because most consumers gave unreliable responses to the survey questions.
B) Although the results were not conclusive, there is some evidence that odd pricing makes economic sense.
C) The surveys found indifference regarding this strategy among most consumers, but hostility among other consumers. The latter group resented what they viewed as an attempt to fool them into buying products with odd prices. Researchers concluded that odd pricing is counterproductive.
D) The surveys found that small differences in price cause small differences in quantity demanded. There is no evidence that odd pricing makes economic sense.
Question 2
The change in consumption divided by the change in disposable income is equal to
A) real GDP. B) household saving.
C) the slope of the consumption function. D) aggregate expenditure.
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