Q1 - Heritage Pots has a 16.

4 per cent market share of the garden pots market

in Wallington. The market is worth $14,000,000 per year. Calculate the annual sales
of Heritage Pots. [2 MARKS]

14000000x16.4= 2296000

Q2 - Describe cognitive biases that influence consumers when two making

consumption choices. [10 MARKS]
Availability biases refer to human tendency to overestimate the likelihood of an event
occurring, based on how easily similar situation or example come to mind. This
cognitive bias affect decision making and could result in irrational choices being
made. For example, people tend to buy the lottery for they overestimate the
probability of winning the lottery due to frequent media coverage.

Moreover, the bounded rationality could also have an impact on consumers choice
making in consumption. Bounded rationality refers to the idea that consumer
rationality is limited due to constraints such as our cognitive abilities time and
imperfect information as a result consumer sacrifice a degree of utility and achieve
satisfactory results instead of optimal results.

Lastly, the anchoring bias. Anchoring bias refers to how the humans usually
completely rely on the first thing information that they receive no matter how reliable
that piece of information that is. For example, when a consumer wants to buy a car,
and the first time the consumer asks the price of the car, I told him it cost 30000
dollars, and a few weeks later the consumer comes back and finds the same car but
with a price of 20000 dollars, then the consumer would think it’s a very cheap price.
Because his judgment is based on the initial information that he got which was 3000.

These cognitive biases demonstrate how individuals' decision-making processes can

be influenced by various psychological factors.

Q3 - Using real-world examples, evaluate the effectiveness of nudge theory in

helping consumers to make better choices. [15 MARKS]
Nudge theory,

Nudge theory, a concept popularized by behavioral economists Richard Thaler and

Cass Sunstein, suggests that subtle changes in the way choices are presented can
influence individuals to make better decisions without restricting their freedom of
choice.

One of the real-world examples is the calorie labeling on menus, in several countries
calories are bring labeled on the menus for certain establishment, this aims to make
consumers more aware of the nutritional content of the food choices.
Another real-world example is the default setting on devices and apps, the default
settings on devices and apps are a type of nudge that is used to influence user
behavior in technology. These settings are the pre-selected options that are
automatically applied when a device or app is first used or when a new feature is
introduced. They are designed to make it more likely that people will take a certain
action or make a certain choice.

The last real-world example is the reminder and goal setting tool in fitness or wellness
apps, the use of reminders and goal-setting tools is a type of nudge that is used to
encourage healthy and wellness behaviors. These tools are designed to help people
stay on track and achieve their goals by providing reminders and support.

In short, the nudge theory can certainly be useful to our life, such as health, wellness,
finance, and technology. Moreover, nudges can be effective in encouraging people to
make positive changes in their lives.