Question

Sandy uses online banking, and her bank charges her $4.99 per month. However, she has seen ads for a competing bank offering free online banking services. She'd like to switch, but she realized that it might be difficult to do because she has several of her bill payments set up as automatic debits. The cost of changing to another bank represents Sandy's _____.

Answer 1

Answer:

b. Switching cost

Explanation:

The cost of Sandy changing to another bank represents Sandy's switching cost.

Switching cost refers to the cost incurred by a customer as a result of changing brands or produce.

An individual or Customer can decide to change brands, product or suppliers at a particular time due to a number of reasons. The cost of that change is called switching cost.

Customers usually switch product if it is discovered that the new product has more benefits than the previous product.

The cost of switching can be

• Time costs: The cost of time Sandy used to change to another bank.

•Effort-based cost: The effort Sandy directed to changing her bank.

• Psychological cost: This is the is the cost of determining whether the new bank will be better than the former bank.

Answer 2

Answer:

Switching cost.

Explanation:

In Microeconomics, Switching cost can be defined as the cost that a consumer or service taker incurs from having to switch service provider, supplier, product or brand to another. It is also known as switching barriers, which basically involves the cost associated with changing of brand or service provider.

Hence, the cost of changing to another bank represents Sandy's Switching Cost.