FREE

1. Why is “zero” such a hot-button word?
Free, which goes hand in hand with the word zero is…“Decline in quality and cost of money but it something next cost money we wouldn’t feel the same way.” Like the example in the listening, a free bagel is often stale but ketchup is always free and zero dollars and it is okay. Zero is such a hot-button word because it essentially refers to something being “free” or costing nothing in value. Zero means nothing and there for when used in context it can become a hot-button word when pricing comes into the picture.


2. Explain and give an example of a mental transaction cost.
The act of subscribing to a magazine is an example of a mental transaction cost. For the subscriber to pay even one cent, it is showing the advertiser that they are interested in the subscription and therefore will pay in order to read it. When a magazine is free, it is regarded as junk and not as valuable because the customer is not paying for it. The magazine is just there and available and not something that the customer would necessarily be interested in. Prescribers make their profit from advertising and tend to make up the difference and find out what makes something profitable. There is also as the audio states “controlled circulation” in which prescribers give out magazines for free. There for people often wonder why there are more readers who actually want to read the magazines that are free vs. the ones that aren’t. As stated in the audio, it’s all mind tricks of what you are and aren’t paying and what it means.