Suppose that Dairy Barn Foods produces a regular sour cream with 10 grams of fat per serving and a "low fat" sour cream with only 5 grams of fat per serving (assume that this is still considered a lot of fat to consume per serving). According to prospect
theory, how should Dairy Barn promote its "low fat" sour cream?
A. It should make no mention of fat content, either in absolute terms or relative to its regular
sour cream.
B. It should advertise that the "low fat" sour cream has only "half the fat" of the regular sour
cream.
C. It should advertise that the "low fat" sour cream has only 5 grams of fat per serving.
D. It won't matter what strategy Dairy Barn uses, as consumers are sufficiently informed as to
not be affected by the advertising.
Answer: B
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Which of the following is one of the macroeconomic goals established by the 1946 Employment Act?
A. Providing an economic environment conducive to growth B. Maintaining a constant level of consumer expenditure C. Preventing large fluctuations in exchange rates D. Ensuring that employers pay workers a minimum wage sufficient to escape poverty
Suppose the federal government had budget surpluses of $80 billion in year 1 and $120 billion in year 2 but had budget deficits of $10 billion in year 3 and $40 billion in year 4. Also assume that it used its budget surpluses to pay down the public debt. At the end of these four years, the federal government's public debt would have
A. increased by $50 billion. B. decreased by $200 billion. C. increased by $150 billion. D. decreased by $150 billion.
Market failure occurs when:
A. markets have perfect information. B. markets do not produce the most efficient outcome. C. companies merge to increase efficiency. D. companies are too efficient.
Explain whether you agree or disagree with the following statement: "The reason that inflation is bad is because it increases the cost of living—the costs of goods and services we buy—without increasing income in general."
What will be an ideal response?