Title: QUIZ: The Psychology of Free: How a Price of Zero Influences Decisionmaking -- Page One Economics®
Course: Kelly's Copying and Exporting Course > Section: The Psychology of Free: How a Price of Zero Influences Decisionmaking -- Page One Economics®

Q: What is the "zero-price effect"?
- The idea that people prefer expensive items over free ones
- Placing a higher value on something just because it is free
- The assumption that free items are of low quality
- The economic principle that free items have no real cost
A: Placing a higher value on something just because it is free

Q: Which economic concept is linked to the excitement of getting something for free?
- Marginal utility
- Marginal cost
- Consumer surplus
- Inflation
A: Consumer surplus

Q: How does "free" impact rational cost-benefit analysis?
- It encourages people to be more logical about their choices.
- It forces people to consider the long-term consequences.
- It causes people to bypass logical decisionmaking and act emotionally.
- It has no effect on decisionmaking processes.
A: It causes people to bypass logical decisionmaking and act emotionally.

Q: Which of the following best explains why free shipping leads to higher spending?
- Customers perceive greater value in adding more items than paying for shipping.
- Free shipping decreases the overall price of all items in the cart.
- Customers believe the shipping cost will be refunded later.
- Free shipping makes customers more likely to abandon their carts.
A: Customers perceive greater value in adding more items than paying for shipping.

Q: How do social norms affect consumer behavior when items are free?
- People take as much as they can without hesitation.
- People reduce the amount they take to avoid appearing greedy.
- People tend to ignore social expectations and focus only on personal gain.
- Social norms have no effect on free item consumption.
A: People reduce the amount they take to avoid appearing greedy.

Q: Why did tardiness increase when a fine was introduced at the daycare?
- The fine made showing up on time seem optional.
- The fine was too expensive for most parents to pay.
- The daycare’s policy made lateness less common.
- Parents were confused about the new rule.
A: The fine made showing up on time seem optional.

Q: According to the law of demand, when the price of a product decreases, the quantity demanded
- decreases.
- remains constant.
- becomes unpredictable.
- increases.
A: increases.

Q: What is one key takeaway from both the candy and daycare experiments?
- Economic decisions are purely rational and uninfluenced by emotions.
- Social norms can sometimes override traditional market behaviors.
- People always prefer paying a small amount over getting things for free.
- Pricing decisions have no impact on consumer behavior.
A: Social norms can sometimes override traditional market behaviors.