Question

elizabeth has decided to purchase a new electric juicer and plans to call a friend for the latest information about alternative brands. she is not concerned about where she buys it as long as she receives a very generous return policy should anything go wrong. in making her decision, elizabeth will engage in which problem-solving variation?

Answer 1

Elizabeth is using decision making by comparing marginal utility, focusing on the return policy for a new electric juicer to maximize her satisfaction from the purchase. She is mitigating imperfect information by consulting a friend to inform her choice.

Step-by-step explanation:

Elizabeth is engaging in a problem-solving variation known as decision making by comparing marginal utility. When considering the purchase of a new electric juicer, she is looking for information to maximize her utility, which in this case, is a comprehensive return policy. Elizabeth's process involves assessing the additional satisfaction (marginal utility) she would gain from the return policy of each brand.

This approach is similar to the example of José, who uses marginal utility to decide how many T-shirts and movies to purchase. In Elizabeth's situation, she prioritizes the return policy over the location of purchase because that policy offers her the greatest perceived marginal utility and protects her from potential dissatisfaction with the product.

In the context of imperfect information, Elizabeth is overcoming this by consulting a friend, assuming her friend's advice will decrease the level of imperfect information and increase the likelihood of a purchase that aligns with her needs for a generous return policy.