Microeconomics (9th Edition) (Pearson Series in Economics)
9th Edition
ISBN: 9780134184241
Author: Robert Pindyck, Daniel Rubinfeld
Publisher: PEARSON
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Chapter 19, Problem 1RQ
To determine
The behavioural economics and framing
Expert Solution & Answer
Explanation of Solution
According to the behavioural economics, it is highly probable that most people would opt for the package mentioned 80% lean. This is a way of framing that stores undertake to grab the attention of the consumers who are into the lean meat. This is because consumers think that fat is undesirable and therefore, emphasize on the percentage of lean meat grabs the attention of these consumers.
Economics Concept Introduction
Behavioral economics: Behavioral economics is the subfield of economics that integrates the insights of psychology with it. In other words, it is the approach toward economics which incorporates the psychological, social, and cognitive factors on the economic decisions of the individuals.
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Students have asked these similar questions
When consumers were given the opportunity to select a package of ground beef labeled “75% lean” or a package of ground beef labeled “25% fat,” most consumers chose “75% lean.” Why? What concept from the chapter does this illustrate?
The reason is that consumers are swayed by cheap talk. Cheap talk is the concept.
The reason is that consumers are much more likely to choose the alternative framed as the positive option. This is called a framing effect.
The reason is that consumers infer the value of a product from positive advertising. This is called inference induction.
The reason is that consumers respond better to higher numbers. They feel they are getting more because 75 is greater than 25. The concept is the endowment effect.
Explain behavioral economic belief
Sean is arguing with his girlfriend, Yvette. They have been going out for a little more than two years.
YVETTE: I'm leaving you, Sean. Get over it.
SEAN: Are you saying that being single will make you happier than you've been with me? Speaking personally, I think the
utility
we've had in this relationship was much more than you could have had if you'd been single this whole time!
YVETTE: I had taken an economics class and the word "utility" rings a bell. It's not that at all. We've had a fine time. It's that the
utility I would get by continuing our relationship isn't worth it anymore.
SEAN: I've never been dumped by someone citing the law of
before. You're a piece of work, you know that?
Yvette doesn't hear. She has already walked off, leaving Sean feeling like something of a sunk cost.
Chapter 19 Solutions
Microeconomics (9th Edition) (Pearson Series in Economics)
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