2. Is the dealer’s pricing policy consistent with the extent to which consumers’

Question

2. Is the dealer’s pricing policy consistent with the extent to which consumers’ attention being biased towards the left-hand side digits in mileage?

A.

Yes, because the price does not vary significantly with milermd

B.

Yes, because the price decreases significantly with mile1k

C.

Yes, because both price and consumers’ choices vary significant with mile10k

D.

No, because consumers’ choices do not vary significantly with mile1k but the price varies significantly with mile1k

Pricing regression results: Number of obs-973 R-squared 0.701 Root MSE 1.335 price mile10k mile1k milemrd eng vol modelyr06 modelyr07 modelyr08 modelyr09 altima camry civic corolla sonata Coef. Std. Err. -0.529 -0.500 2.129 2.099 0.216 0.262 1.273 2.226 2.825 1.063 1.045 0.013 0.554 0.241 0.026 0.147 1.557 0.154 0.077 0.215 0.202 0.209 0.228 0.143 0.131 0.261 0.532 0.318 20.290 0 3.400 1.370 13.640 2.810 1.220 6.320 10.640 12.370 7.440 7.960 0.050 1.040 0.760 0.000 0.001 0.172 0.000 0.005 0.223 0.000 0.000 0.000 0.000 0.000 0.961 0.298 0.449 (95% Conf. -0.581 -0.788 -0.927 1.797 0.065 -0.160 0.878 1.816 2.377 1.343 1.303 -0.500 1.598 -0.383 Interval] 0.478 -0.212 5.184 2.401 0.366 0.684 1.669 2.637 3.273 -0.782 0.787 0.526 0.490 0.865 cons

Explanation / Answer

Answer is C

Yes, because both price and consumers choices vary significant with mile10k

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