Friday, November 5, 2010

Mental transaction

Explain and give an example of a mental transaction cost.

a mental transaction cost is when an individual is making a purchase, but has varying thoughts enter into their head whether the purchase they are about to make is necessary or worth it at the current moment.  Mental transactions occur on a regular basis for many individuals, especially when people in today's society are trying to save money.  This goes along with the number "zero", when an item is free there is not any mental transactions simply because there is no costs associated with a free item.  Mental transactions are present every day for most individuals making changes to daily purchases and activities, many times without the individual realizing such transactions are being made.

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