Kendra always buys a certain brand of shampoo for which she normally pays $7.99 a bottle. She saw an advertisement for a different brand of shampoo that seemed to offer additional benefits, but the price for that brand was $12.99. Kendra thinks that $12.99 is too much to pay for shampoo and that $7.99 is a more reasonable price. For Kendra, $7.99 represents a Blank______.

Question

Kendra always buys a certain brand of shampoo for which she normally pays $7.99 a bottle. She saw an advertisement for a different brand of shampoo that seemed to offer additional benefits, but the price for that brand was $12.99. Kendra thinks that $12.99 is too much to pay for shampoo and that $7.99 is a more reasonable price. For Kendra, $7.99 represents a Blank______.
Multiple choice question.

break-even point

fixed cost

market value

reference value

GPT-4o mini · Answer

For Kendra, $7.99 represents a **reference value**. Reference value is the price point that she considers reasonable based on her prior experience and expectations, which influences her perception of the new price of $12.99.