Week Ten

From the audio book chapter on Free:
1. Why is “zero” such a hot-button word?

Zero is a hot button word because when people hear the word zero they automatically hear the word free thus jump to the idea of taking the item. Today's society is driven by money. People want to be rich and successful thus they need money. When you hear that something is free people are shocked and do not hesitate to take the free item. Since everything today has a price tag people are surprised to see that something is free. When you do find an item that is free people splurge and take as many items as possible because you do not have to pay. Free or zero cost items allow people to indulge because you do not have to think logically that the price might affect you. You do not have to open your wallet, thus the free item does not affect your bank account.

2. Explain and give an example of a mental transaction cost.

Mental transaction cost is when you decide whether or not to purchase a product based on the price tag of the product. Is this product worth the money? Do I actually need this product? These are common questions you might ask yourself when you are trying to decide if you should purchase the product. This is why a zero cost of an item is so important. An example of a mental transaction cost is when you are deciding whether or not you should buy a new pair of jeans. You might look for a coupon for the store first to save you money. When you go to the store the average price of jeans might be about $50, but the jeans you want are $80. You might not try on the jeans you want or even look at them because of the price.