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# Consumer's overall perception of the value of a purchase is based not

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Re: Consumer's overall perception of the value of a purchase is based not [#permalink]
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farrous13 wrote:
Consumer's overall perception of the value of a purchase is based not just on assessing the product's inherent value (the acquisition value) but also in part on assessing the value of the "deal", i.e., the transaction value. To assess the transaction value, buyers tend to compare the sales price with another price, the "reference price", that they take to represent the product's real value - another advertised price for the same product or the price of a competing product. The more the reference price exceeds the sale price, the greater the transaction value. When advertising, retailers now routinely provide two prices: a suggested reference price and their actual selling price. Thus, when the selling price is held constant, consumers tend to perceive offers with higher suggested reference prices as presenting a better deal since they suggest greater savings.

Which of the following is an assumption on which the argument depends?

A- Acquisition value does not affect consumers' assessment of transaction value.
B- Advertised reference prices may differ from manufacturers' suggested retail prices.
C- Consumers almost never pay the full advertised reference price for a product.
D- Consumers perceive most suggested reference prices in retailers' advertising to be sufficiently credible as a guide to transaction value.
E- Transaction value is more important than acquisition value in predicting consumer purchasing behavior.

The conclusion - last line - talks about "reference price" and the reference price is set by the retailers.

The assumption is a piece of information that MUST be true in order for the conclusion to be true. Of the five answer choices , B , C , & D mentions reference prices. Reference prices need to be related to consumers. B out.

Between C & D. Also, Reference prices are used to guide transaction value. Only D remains.
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Re: Consumer's overall perception of the value of a purchase is based not [#permalink]
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We must find an answer choice that strengthens this point - consumers while selecting a product are only concerned about the difference of sell price and reference price that they can calculate from the information shared by the retailers.So consumers that the retailers suggestion as their reference pint

only (D) says , retailers given reference price is sufficient for the consumers and they will look no further

Other options are not focused on this point and some of them employ acquisition value which totally out of scope of the conclusion

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Re: Consumer's overall perception of the value of a purchase is based not [#permalink]
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I tried, and it seems that there is no need to read the whole argument to choose D as the correct answer.
For this reason, this question is only at sub lvl 600.

B,C,E are out for sure b/c these options do not sound like an assumption but out of scope.
The first sentence helps to eliminate A => D is the answer.
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Re: Consumer's overall perception of the value of a purchase is based not [#permalink]
farrous13 wrote:
Consumer's overall perception of the value of a purchase is based not just on assessing the product's inherent value (the acquisition value) but also in part on assessing the value of the "deal", i.e., the transaction value. To assess the transaction value, buyers tend to compare the sales price with another price, the "reference price", that they take to represent the product's real value - another advertised price for the same product or the price of a competing product. The more the reference price exceeds the sale price, the greater the transaction value. When advertising, retailers now routinely provide two prices: a suggested reference price and their actual selling price. Thus, when the selling price is held constant, consumers tend to perceive offers with higher suggested reference prices as presenting a better deal since they suggest greater savings.

Which of the following is an assumption on which the argument depends?

A- Acquisition value does not affect consumers' assessment of transaction value.
B- Advertised reference prices may differ from manufacturers' suggested retail prices.
C- Consumers almost never pay the full advertised reference price for a product.
D- Consumers perceive most suggested reference prices in retailers' advertising to be sufficiently credible as a guide to transaction value.
E- Transaction value is more important than acquisition value in predicting consumer purchasing behavior.

Can you please explain this question in detail ?
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Re: Consumer's overall perception of the value of a purchase is based not [#permalink]
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farrous13 wrote:
Consumer's overall perception of the value of a purchase is based not just on assessing the product's inherent value (the acquisition value) but also in part on assessing the value of the "deal", i.e., the transaction value. To assess the transaction value, buyers tend to compare the sales price with another price, the "reference price", that they take to represent the product's real value - another advertised price for the same product or the price of a competing product. The more the reference price exceeds the sale price, the greater the transaction value. When advertising, retailers now routinely provide two prices: a suggested reference price and their actual selling price. Thus, when the selling price is held constant, consumers tend to perceive offers with higher suggested reference prices as presenting a better deal since they suggest greater savings.

Which of the following is an assumption on which the argument depends?

A- Acquisition value does not affect consumers' assessment of transaction value.
B- Advertised reference prices may differ from manufacturers' suggested retail prices.
C- Consumers almost never pay the full advertised reference price for a product.
D- Consumers perceive most suggested reference prices in retailers' advertising to be sufficiently credible as a guide to transaction value.
E- Transaction value is more important than acquisition value in predicting consumer purchasing behavior.

Perception of Value = Inherent value + Transaction value

Transaction value = Reference price - Sale price

So now, when advertising, retailers provide two prices: a suggested reference price and their actual selling price.

Conclusion: When sale price is held constant, consumers tend to perceive offers with higher suggested reference prices as presenting a better deal

The conclusion talks about "suggested reference price" (that the retailers advertise). The transaction value that the argument talks about is the diff between reference price (another advertised price or the price of a competing product) and sale price. So the gap in the logic is that the suggested reference price provides credible value of reference price and hence, transaction value.

Option (D) does just that.
D- Consumers perceive most suggested reference prices in retailers' advertising to be sufficiently credible as a guide to transaction value.

So (D) is correct.
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Re: Consumer's overall perception of the value of a purchase is based not [#permalink]
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Conclusion of the argument : when the selling price is held constant, consumers tend to perceive offers with higher suggested reference prices as presenting a better deal

we need something that strengthens the above statement

A- Acquisition value does not affect consumers' assessment of transaction value.
>This cannot be assumed as per the first sentence of the argument. This neither strengthens not weakens the above conclusion

B- Advertised reference prices may differ from manufacturers' suggested retail prices.
>Try negating, [color=#ed1c24]Adv ref price will be same as Retail price, this dosent weakent the argument.[/color]

C- Consumers almost never pay the full advertised reference price for a product.
>Irreleavent point to discuss

D- Consumers perceive most suggested reference prices in retailers' advertising to be sufficiently credible as a guide to transaction value.
>Correct

E- Transaction value is more important than acquisition value in predicting consumer purchasing behavior.
>Argument never does the comparison between transaction value and acquisition value, it only says both are necessary
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Re: Consumer's overall perception of the value of a purchase is based not [#permalink]
D aside, can someone explain to me why B is not correct?
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Re: Consumer's overall perception of the value of a purchase is based not [#permalink]
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Re: Consumer's overall perception of the value of a purchase is based not [#permalink]
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