Q4: Ch 5 (10%)
In terms of the consumer theory set forth in this chapter, can you explain the meaning of the following statements?
a. “I think you get more for your money from Nike than from Reebok.”
b. “I wanted to buy a Boxster rather than a Malibu, but it just wasn’t worth it.”
c. “I’d like to go to Mexico over spring break, but I just can’t afford it,” said Don. Jill asked, “Don’t you have enough money in your account?” Don replied, “Yeah, but I can’t afford to go.”
d. “I’ll have to flip a coin to decide whether to buy chocolate chip or vanilla fudge ice cream.”
a. In terms of consumer theory, the statement "I think you get more for your money from Nike than from Reebok" suggests that the individual perceives the value or utility derived from purchasing Nike products to be higher compared to Reebok products for the price paid. It implies that the person believes that Nike offers better quality, features, or overall satisfaction relative to the price they charge, making it a more favorable choice in terms of value for money.
To determine if this statement holds true or not, one would need to conduct a comparison of the prices and attributes of Nike and Reebok products, along with assessing individual preferences and perceived utility. This can involve analyzing customer reviews, conducting surveys or market research, and considering factors such as brand reputation, product durability, performance, and personal preferences.
b. The statement "I wanted to buy a Boxster rather than a Malibu, but it just wasn't worth it" refers to a personal evaluation of the trade-off between the cost and the perceived benefits or utility of the two options. In this case, the individual desired a Boxster (a luxury sports car) over a Malibu (a conventional car). However, they ultimately decided against purchasing the Boxster because they determined that the additional cost incurred for the luxury car did not justify the benefits or experiences it would provide.
To assess the worthiness, one would need to compare the prices, features, functionality, and other relevant factors of the Boxster and Malibu, along with considering the individual's specific preferences, budget constraints, and their assessment of the utility or satisfaction each car would bring. This evaluation might involve researching online, gathering information from car dealerships, test-driving the vehicles, and taking into account financial considerations, such as the cost of ownership, maintenance, and potential resale value.
c. In this statement, Don expresses his desire to go to Mexico over spring break but claims that he can't afford it, despite having sufficient money in his account. This situation can be explained by the concept of budget constraint in consumer theory. The budget constraint represents the limit on an individual's spending based on their income and prices of goods.
Although Don may have enough money in his account, he perceives that going to Mexico would exceed his budget constraint. This could be due to other financial commitments, saving goals, or personal preferences prioritizing different spending decisions. Don's assessment of affordability is subjective and based on his personal judgment of what he considers as an acceptable use of his resources.
To further investigate this situation, one would need to understand Don's income level, his other financial obligations, and his perception of the opportunity cost associated with the trip. It may involve discussing Don's financial situation, his goals, and considering factors such as travel expenses, accommodation, activities, and the impact on his overall financial well-being.
d. The statement "I'll have to flip a coin to decide whether to buy chocolate chip or vanilla fudge ice cream" demonstrates indecisiveness between two options with no clear preference. Flipping a coin is a random decision-making method when faced with similar or equal choices.
To determine the final decision or preference, additional factors might be considered. For instance, an individual might consider personal taste preferences, any dietary restrictions, the availability or price of the ice cream flavors, or any relevant information that can impact their satisfaction or utility derived from consuming each alternative.