Question 5Oriental rugsalesmen often start a negotiation by mentioning a ridiculously high price foran item in which you’ve expressed interest. Similarly, posted full fares onairlines tend to be significantly higher than the price that the averageeconomy-class passenger typically pays. Which of the following biases bestexplains why these merchants quote a starting price far higher than theultimate transaction price?1 point Base Rates MoneyIllusion House MoneyEffect Anchoring EndowmentEffect

The following experiment was carried out withundergraduates at Duke University. Theresearchers divided participants into two groups. One group was asked to state the highestprice they would pay for a ticket to the NCAA Final Four basketball tournament,a highly prized item on campus. The other group was told to imagine they hadsuch a ticket and was asked for the lowest price at which they would be willingto sell it. The median selling price was $1,500; the median buying price was$150. Which of the following bias(es) might explain why the buying and sellingprices were so different? Please selectall that apply.1 point Regret Theory Loss Aversion Endowment Effect Disposition Effect

Many consumers shrink from buying either the highest- orlowest-priced item among a group of similar items, seeming to prefer somethingin between. For example, retailer Williams-Sonoma Inc. was able to increasesales of its $275 bread machine by adding a second, slightly larger model toits catalogue at a price of just over $400. And Xerox Corp. at one time boostedsales of its high-volume copier to large corporations by introducing ahigher-priced model with a few extra bells and whistles. Which one of the following biases best explains this effect?1 pointAnchoringDispositionEffect Availability Heuristic HouseMoney Effect Framing StatusQuo Bias

Initially how did they come up with a price?Group of answer choicesless than their costs to get into the marketmore than their competitors since they delivered as wellThey made up a numberjust enough to cover their costs

How do the prices that prevail during price discrimination compare to the price that would exist if the market were charging just one price across all buyers?

Explain one reason why airlines use dynamic pricing, especially when selling tickets to online customers.