Question

3) You currently own an old smartphone, which you think could be used for at most one additional year. When shopping for new phones, you were told that you could get $100 off the price of a new smartphone by trading in your old phone. If you would plan to keep the new phone for three years, should the $100 be analyzed as a benefit of getting a new phone, or as a cost of keeping the old phone? Explain your reasoning.

Answer 1

Since the 100 dollar works as rebate or discount it comes asbenefit of buying new phone. Had the old phone been kept it comes across as cost to keep old phone.

Now the old phine keeps depreciating and thus it devakues which orompts user to exchange for new phone for which he gets appreciated value instruments with discount and thus clearly he saves on new phone and experiencesbetter quality as well. Hence, 100 dollars are considered as benefit of new phone.