Question : 7.3   Social Influences Decision Making 1) Consider the following factors: a.culture b.religion c.customs d.prices e.income : 1267115

7.3   Social Influences on Decision Making

1) Consider the following factors:

a.culture

b.religion

c.customs

d.prices

e.income

Which of the factors above are likely to influence the choices consumers make?

A) a, d, and e only

B) all the factors except b

C) all the factors except c

D) d and e only

E) all the factors listed

2) What is the common feature displayed by the following items?

a.eating in a newly opened “fusion” cuisine restaurant

b.attending a Red Sox game in Fenway Park

c.wearing Lucky Brand designer jeans

A) They are all highly inelastic goods.

B) The consumption of these goods takes place privately.

C) The consumption of these goods takes place publicly.

D) They tend to be consumed by better educated people.

3) Consider a good whose consumption takes place publicly. Your decision to buy that good depends

A) both on the characteristics of the product and on how many other people are buying the good.

B) only on the characteristics of the good.

C) only on how many other people buy the good.

D) only on the price of the good.

4) Which of the following does not explain why consumers buy products that many other consumers are already buying?

A) technology

B) the satisfaction people derive by being viewed as “fashionable”

C) cost-effective way to gather information about a product

D) differences in tastes and preferences

5) Identify the one statement that does not demonstrate how social effects influence consumer choice.

A) Students in an Economics class are required to purchase a textbook assigned by the professor.

B) There is utility gained from consuming goods or services that others are consuming.

C) Some products that people consume are determined by the social popularity of the products.

D) Companies such as Zappos.com and Netflix invite their consumers to write reviews about their experience with their products which are then posted on the internet for others to see.

6) Firms pay famous individuals to endorse their products because

A) apparently demand is affected not just by the number of people who use a product but also by the type of person that uses the product.

B) the firms are irrational and are wasting advertising expenditures.

C) famous people obviously know what are the best goods and services.

D) famous people only consume high quality products.

7) By hiring Justin Bieber to advertise its electronics Buy Back program, Best Buy is hoping to change its image and reach a new, younger target market. By using celebrities such as Bieber to endorse products, companies are hoping that its customers will respond positively and business will increase. All of the following are reasons why celebrity endorsements may increase sales for advertised products except

A) consumers may believe that celebrities have more information than they do about the advertised product.

B) consumers may feel closer to celebrities if they purchase the products being endorsed.

C) consumers can be sure that a company would not pay a large sum for a celebrity to endorse its product unless  the product is the best available in the market.

D) consumers may believe they will appear more fashionable if they purchase products endorsed by certain celebrities.

8) A network externality occurs when

A) there is production cost savings from being networked with suppliers.

B) there is production cost savings from being networked with buyers.

C) the usefulness of a good is affected by how many others use the good.

D) the usefulness of a good is affected by celebrities who use the good.

9) Once a product becomes established, network externalities may create ________ costs that make consumers reluctant to buy a new product with better technology.

A) external

B) implicit

C) switching

D) marginal

10) A significant downside to network externalities is that

A) there may be large switching costs to consumers of changing products so that consumers end up using products with inferior technologies.

B) firms may network with unethical suppliers or distributors.

C) the costs of hiring celebrity endorsements may be very high.

D) there may be large switching costs to firms changing technologies.