From the audio book chapter on Free:
1. Why is “zero” such a hot-button word?
Zero is such an interesting word because it has so many different implications. Although it does not always mean poor quality, there are many times when that is what people assume. Usually poor quality is linked with free when something used to cost something, but now costs the consumer nothing. For some reason people associate that with the product losing quality, even if that is not the case at all.
There are some things that are free and we do not expect them to have less quality. Google was an example of this. It is a free online service that no one expects to have to pay for and just because it is free does not mean that it has poor quality.



2. Explain and give an example of a mental transaction cost.

A mental transaction cost is a "cost" that consumers have to take into account when deciding whether or not to purchase something. Choosing the type of thing you want to buy, deciding where to buy it, and waiting in line to buy the item are all transaction costs.
An example of a mental transaction cost from the lecture is when someone offers a truffle at the price of $0.15 or a hershey kiss at a price of $.01. Most people will choose the truffle because the mental transaction cost is not more than what the truffle is worth. However, when you lower the price of each of the chocolates by one cent, the mental transaction cost becomes a lot greater for buying a truffle, and therefore more people will take one of the kisses because it is free. The mental transaction cost was more than the benefits of buying the truffle.