Shawn Van Dyke, a construction industry consultant, wrote on a home building site: Brains do some pretty funny things when making a buying decision. If you understand your customers’ brain activities, then you can use this knowledge to help increase your sales and deliver on value. . . . There’s an old question in advertising. “How do you sell a $2,000 watch? Put it next to a $10,000 watch.” This is an example of price anchoring.

a. What is price anchoring?

b. Explain why Van Dyke cited the “old advertising question” as an example of price anchoring.