one type of systematic error arises because people tend to think of benefits in percentage term rather than in absolute dollar amounts. as an example, samir is wiling to drive 20 minutes out of his way to save $4 on grocery item that cost $10 at local market. but he is unwilling to drive 20 minutes out of his way to save $10 on laptop that cost $400 at a local store. in percentage terms, how big is the saving on the grocery items? on the laptop? in absolute terms, how big is the saving on the grocery item? on the laptop? idf samir is willing to sacrifice 20 minutes of his time to save $4 in one case, shouldn't he also be willing to sacrifice 20 minutes of his time to save $10?

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A. Savings on the grocery item: 40%

On the laptop: 2.5%
B. In absolute terms
Savings on grocery items: $4
On the laptop: $10
C. If Samir is willing to sacrifice 20 minutes of his time to save $4 in one case, shouldn't he also be willing to sacrifice 20 minutes of his time to save $10: Yes

To determine the savings in both percentage and absolute terms, let's calculate them step by step:

1. Finding the percentage savings on the grocery item:
The original price of the grocery item is $10, and Samir is willing to drive 20 minutes out of his way to save $4. Therefore, the percentage savings can be calculated as:
Percentage savings = (Savings / Original price) * 100
Percentage savings on the grocery item = (4 / 10) * 100 = 40%

2. Finding the percentage savings on the laptop:
The original price of the laptop is $400, and Samir is unwilling to drive 20 minutes out of his way to save $10. The percentage savings can be calculated as:
Percentage savings on the laptop = (Savings / Original price) * 100
Percentage savings on the laptop = (10 / 400) * 100 = 2.5%

3. Finding the absolute savings on the grocery item:
The absolute savings on the grocery item are $4 because Samir is willing to drive 20 minutes out of his way to save $4.

4. Finding the absolute savings on the laptop:
The absolute savings on the laptop are $10 because Samir is unwilling to drive 20 minutes out of his way to save $10.

If Samir is willing to sacrifice 20 minutes of his time to save $4 on the grocery item, it does not necessarily mean that he should also be willing to sacrifice the same amount of time to save $10 on the laptop. This discrepancy could be due to the fact that Samir perceives the savings in percentage terms rather than absolute dollar amounts, which can lead to systematic errors in decision-making.

To determine the savings in percentage terms for the grocery item, we first need to calculate the percentage of the discount.

The savings on the grocery item can be calculated as follows:

Savings = Original price - Discounted price
Savings = $10 - $4
Savings = $6

The percentage savings on the grocery item can be calculated using the formula:

Percentage Savings = (Savings / Original price) * 100

Percentage Savings = ($6 / $10) * 100
Percentage Savings = 60%

Therefore, Samir is seeing a 60% savings on the grocery item.

Now let's calculate the percentage savings on the laptop.

Savings on the laptop = $10
Percentage Savings on the laptop = (Savings / Original price) * 100

Percentage Savings on the laptop = ($10 / $400) * 100
Percentage Savings on the laptop = 2.5%

Therefore, Samir is seeing a 2.5% savings on the laptop.

In absolute terms, the savings on the grocery item is $6, and the savings on the laptop is $10.

Regarding Samir's willingness to sacrifice 20 minutes of his time, this discrepancy in willingness can be attributed to a systematic error in perception. People tend to view percentage savings more favorably, as they focus on the relative discount. In Samir's case, he perceives the $6 savings on the grocery item as more significant due to the higher percentage savings (60%), compared to the $10 savings on the laptop, which represents a smaller percentage savings (2.5%). However, from a rational standpoint, sacrificing the same amount of time for a larger absolute saving would indeed make more sense.