READING TEST 1

PASSAGE =1 "Psychology Product Adoption"

A. In today’s hypercompetitive marketplace, companies that successfully introduce new

products are more likely to flourish than those that don’t. businesses spend billions of dollars
making better “mousetraps” only to find consumers roundly rejecting them. Studies show that
new products fail at the stunning rate of between 40% and 90%, depending on the category,
and the odds haven’t changed much in the past 25 years. In the U.S. packaged goods industry,
for instance, companies introduce 30,000 products every year, but 70% to 90% of them don’t
stay on store shelves for more than 12 months. Most innovative products – those that create
new product categories or revolutionize old ones – are also unsuccessful. According to one
study, 47% of first movers have failed, meaning that approximately half the companies that
pioneered new product categories later pulled out of those businesses.

After the fact, expErts and novices alike tend to dismiss unsuccessful innovations as bad ideas
that were destined to fail. Why do consumers fail to buy innovative products even when they
offer distinct improvements over existing ones? Why do companies invariably have more faith
in new products than is warranted? Few would question the objective advantages of many
innovations over existing alternatives, but that’s often not enough for them to succeed. To
understand why
new products fail to live up to companies’ expectations, we must delve into the psychology of
behavior change.

B. New products often require consumers to change their behavior. As companies know,
those behavior changes entail costs. Consumers costs, such as the activation fees they have to
pay when they switch from one cellular service provider to another. They also bear learning
costs, such as when they shift from manual to automatic automobile transmissions. People
sustain obsolescence costs, too. For example, when they switch from VCRs to DVD players,
their videotape collections become useless. All of these are economic switching costs that
most companies routinely anticipate.

C. What businesses don’t take into account, however, are the psychological costs
associated with behavior change. Many products fail because of a universal, but largely
ignored, psychological bias: People irrationally overvalue benefits they currently possess
relative to those they don’t. The bias

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leads consumers to value the advantages of products they own more than the benefits of new
ones. It also leads executives to value the benefits of innovations they’ve developed over the
advantages of incumbent products.

D. Companies have long assumed that people will adopt new products that deliver more
value or utility than existing ones. Thus, businesses need only to develop innovations that are
objectively superior to incumbent products, and consumers will have sufficient incentive to
purchase them. In the 1960s, communications scholar Everett Rogers called the concept
“relative advantage” and identified it as the most critical driver of new-product adoption. This
argument assumes that companies make unbiased assessments of innovations and of
consumers, likelihood of adopting them. Although compelling, the theory has one major flaw:
It fails to capture the psychological biases that affect decision making.

E. In 2002, psychologist Daniel Kahneman won the Nobel Prize in economics for a body of
work that explores why and when individuals deviate from rational economic behavior. One of
the cornerstones of that research, developed with psychologist Amos Tversky, is how
individuals value prospects, or choices, in the marketplace. Kahneman and Tversky showed,
and others have confirmed, that human beings’ responses to the alternatives before they have
four distinct characteristics.
F. First, people evaluate the attractiveness of an alternative based not on its objective, or
actual, value but on its subjective, or perceived value. Second, consumers evaluate new
products or investments relative to a reference point, usually the products they already own
or consume. Third, people view any improvements relative to this reference point as gains and
treat all shortcomings as losses. Fourth, and most important, losses have a far greater impact
on people than similarly sized gains, a phenomenon that Kahneman and Tversky called “loss
aversion.” For instance, studies show that most people will not accept a bet in which there is a
50% chance of winning $100 and a 50% chance of losing $100. The gains from the wager must
outweigh the losses by a factor of between two and three before most people find such a bet
attractive. Similarly, a survey of 1,500 customers of Pacific Gas and Electric revealed that
consumers demand three to four times more compensation to endure a power outage – and
suffer a loss – than they are willing to pay to avoid the problem, a potential gain. As Kahneman
and Tversky wrote, “losses loom larger than gains.
G. Loss aversion leads people to value products that they already possess – those that are part of their
endowment – more than those they don’t have. According to behavioral economist Richard Thaler, consumers
value what they own, but many have to give up, much more than they value what they don’t own but could
obtain. Thaler called that bias the “endowment effect.”

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H. In a 1990 paper, Thaler and his colleagues describe a series of experiments they
conducted to measure the magnitude of the endowment effect. In one such experiment, they
gave coffee mugs to a group of people, the Sellers, and asked at what price point – from 25
cents to $9.25 – the Sellers would be willing to part with those mugs. They asked another
group – the Choosers – to whom they didn’t give coffee mugs, to indicate whether they would
choose the mug or the money at each price point. In objective terms, all the Sellers and
Choosers were in the same situation: They were choosing between a mug and a sum of
money. In one trial of this experiment, the Sellers priced the mug at $7.12, on average, but the
Choosers were willing to pay only $3.12. In another trial, the Sellers and the Choosers valued
the mug at $7.00 and $3.50, respectively. Overall, the Sellers always demanded at least twice
as much to give up the mugs as the Choosers would pay to obtain them.
I. Kahneman and Tversky’s research also explains why people tend to stick with what they
have even if a better alternative exists. In a 1989 paper, economist Jack Knetsch provided a
compelling demonstration of what economists William Samuelson and Richard Zeckhauser
called the “status quo bias.” Knetsch asked one group of students to choose between an
attractive coffee mug and a large bar of Swiss chocolate. He gave a second group of students
the coffee mugs but a short time later allowed each student to exchange his or her mug for a
chocolate bar. Finally, Knetsch gave chocolate bars to a third group of students but much later
allowed each student to exchange his or her bar for a mug. Of the students given a choice at
the outset, 56% chose the mug, and 44% chose the chocolate bar, indicating a near even split
in preferences between the two products. Logically, therefore, about half of the students to
whom Knetsch gave the coffee mug should have traded for the chocolate bar and vice versa.
That didn’t happen. Only 11% of the students who had been given the mugs and 10% of those
who had been given the chocolate bars wanted to exchange their products. To approximately
90% of the students, giving up what they already had seemed like a painful loss and shrank
their desire to trade.
J.Interestingly, most people seem oblivious to the existence of the behaviors implicit in the
endowment effect and the status quo bias. In study after study, when researchers presented
people with evidence that they had irrationally overvalued the status quo, they were shocked,
skeptical, and more than a bit defensive. These behavioral tendencies are universal, but
awareness of them is not.
Questions 01-04

Use the information in the passage to match the people with opinions or deeds below. Write

the appropriate letters A-C in boxes 28-31 on your answer sheet.

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A Richard Thaler

B Everett Rogers

C Kahneman and Tversky

01Stated a theory which bears potential fault in the application

02Decided the consumers’ several behavior features when they face other options

03Generalised that customers value more of their possession they are going to abandon for a
purpose than alternative they are going to swap in

04Answered the reason why people don’t replace existing products

Questions 05-09

Do the following statements agree with the information given in Reading Passage 3? In boxes

32-36 on your answer sheet, write

TRUE If the statement is true

FALSE If the statement is false

NOT GIVEN If the information is not given in the passage

05The products of innovations which beat existing alternatives can guarantee a successful
market share.

06The fact that most companies recognised the benefits of switching to new products
guarantees a successful innovation

07Gender affects the loss and gain outcome in the real market place.

08Endowment-effect experiment showed there was a huge gap between the seller’s
anticipation and the chooser’s offer.

09Customers accept the fact peacefully when they are revealed the status quo bias.
Questions 10-13

Choose the correct letter, A, B, C or D.

Write your answers in boxes 37-40 on your answer sheet.

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10What does paragraph A illustrated in the business creative venture?

A above 70% of products stored in the warehouse

B only US packaged goods industry affected

C roughly half of new product business failed

D new products have a long life span.

11What do specialists and freshers tend to think how a product sold well:

A as more products stored on a shelf

B being creative and innovative enough

C having more chain stores

D learning from a famous company like Webvan

12According to this passage, a number of products fail because of the following reason:

A they ignore the fact that people tend to overvalue the product they own.

Bthey are not confident with their products

C they are familiar with people’s psychology state

Dthey forget to mention the advantages of products

13What does the experiment of “status quo bias” suggest which conducted by Nobel prize
winner Kahneman and Tversky:

A about half of them are willing to change

B student is always to welcome new items

C 90% of both owners in a neutral position

D only 10% of chocolate bar owner is willing to swap

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PASSAGE =2 HISTORY OF CAKES

In Western cultures, since antiquity. Weddings customarily have been celebrated with a
special cake. Ancient Roman wedding ceremonies were finalized by breaking a cake of wheat
or barley over the bride’s head as n symbol of good fortune. The newly married couple then
ate some of the crumbs together. Afterward, the wedding guests gathered up the remaining
crumbs as tokens of good luck. Wedding guests were also supplied with sweetmeats called
confetti, a sweet mixture of nuts, dried fruit and honeyed almonds. Handfuls of confetti were
showered over the bride and groom; indeed, it seems to have been the custom to throw
confetti about enthusiastically.
Eventually, confetti in the form of sweets and nuts was replaced with rice, flower petals, or
colored paper, and these new types of confetti continue to be thrown over newly married
couples in many countries around the world.
When the Romans invaded Britain in 43 AD, many of their customs and traditions became part
of British life. These customs included their wedding customs, and when the Normans invaded
Britain in 1066 they brought many French traditions. Other changes came about due to
increased trade and contact with Europe, but present-day British wedding traditions remain
firmly rooted in the past. In medieval Britain, small spiced buns, which were common everyday
fare, were often eaten at weddings. These were stacked in a towering pile, as high as possible.
If the bride and groom were able to kiss over the tall stack, it augured a lifetime of riches. The
earliest British recipe exclusively for eating at weddings is Bride Pie, which was recorded in
1685. This was a large round pie with an elaborately decorated pastry crust that concealed a
filling of oysters, pine nuts lamb and spices. Each guest had to eat a small piece of the pier not
to do so was considered extremely impolite. A ring was traditionally placed in the pie, and the
lady who found it would be next to marry.
In the 17th century, Bride Pie was changed into Bride Cake, the predecessor of the modern
British wedding cake. Cakes containing dried fruit and sugar, symbols of prosperity, gradually
became the centerpieces for weddings. Some people made Bride Cake in the cheaper form of
two large rounds of pastry sandwiched together with currants and sprinkled with sugar. Very
few homes at the time could boast of having ovens, but this type of pastry cake could be
cooked on a baking stone on the hearth.
Later in the 17th century, there was a new development when wedding cakes began to be made in pairs, one
for the bride and another for the groom. Both cakes were dark, heavy fruitcakes; the groom’s cake was
smaller than the bride’s cake, and was cut up into little squares that were placed in boxes for the guests to
take home as a wedding memento. Groom’s cakes gradually died out and are no longer part of British
weddings. However, the tradition has undergone a revival in the

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United States, where for many years the groom’s cake has served as a wedding gift for guests.
Modern groom’s cakes are often formed and decorated to depict the groom’s hobby, for
example a golf bag, a camera, a chess board.

Groom’s cakes were never covered with icing, but Bride Cake covered with white icing first
appeared sometime in the 17th century. After the cake was baked, it was covered with a pure
white, smooth icing made with double refined sugar, egg whites, and orange-flower water.
The mixture was beaten for two hours, then spread over the cake and dried in the oven until
hard. A pure white color was much sought after for wedding cake icing because white icing
meant that only the finest refined sugar had been used. Thus a pure white cake was a status
symbol, as it displayed the family’s wealth.

The late 1800s in Britain saw the introduction of a new tradition, with the first multi-tiered
wedding cakes. These were impressive cakes: they were heavy because they were made with
so much dried fruit, and highly decorated with icing and embellished with sugar flowers,
doves, horseshoes and bells. The first multi-tiered cakes comprised iced cakes stacked on top
of each other rather like a succession of boxes gradually decreasing in size. The cakes from the
upper tiers did not sink into the lower tiers because they were a bit put on top of each other
until the icing between each cake had had time to harden. It was not until the beginning of the
20th century that the cake tiers were separated and supported by columns.

Twenty-first-century weddings are big business for Britain’s wedding industry. Over 300,000
people get married each year and a wedding can cost thousands of pounds. The cost of the all-
important wedding cake can be hundreds of pounds, depending on the dimension and design.
It will be interesting to see whether wedding cakes continue to be popular at weddings.

Questions 14-19

Do the following statements agree with the information given in Reading Passage 1? In boxes

1-6 on your answer sheet, write

TRUE If the statement agrees with the information

FALSE If the statement contradicts the information

NOT GIVEN If there is no information on this

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14. Breaking a cake over the bride’s head was the last part of an ancient Roman wedding

ceremony.

15. Confetti is still made of nuts, dried fruit and honeyed almonds.

16. The groom’s family used to supply the confetti.

17. It was considered lucky for a newly married couple to be able to kiss over a tower of

spiced buns.

18. Only brides were allowed to eat Bride Pie.

19. The wedding cakes eaten in Britain today developed from Bride Cake of the 17th century.

Questions 20-22

Complete the notes below.

Choose ONE WORD ONLY from the passage for each answer. Wedding cakes

17th century- Britain Bride Cake:

- expensive ingredients were a sign of wealth

- less expensive round cakes were made of (20).................

- they were baked on a hearth stone because not all homes had (21)................

Now-United States - Groom Cake:

- guest receive pieces of the groom’s cake

- cakes may represent the (22)...................

Questions 23-26

Label the diagram below.

Choose ONE WORD ONLY from the passage for each answer. Write your answers in boxes

10-13 on your answer sheet.

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Examples of wedding cakes with several (23)......................

In the early 1900s, (24)........................were used to keep individual cakes apart.

The size of these cakes as well as their (25)........................affects pricing.

Hardened (26)........................between cakes stopped higher cakes sinking into tower

cakes.

PASSAGE =3
"Willpower"

A. Although willpower does not shape our decisions, it determines whether and how long
we can follow through on them. It almost single-handedly determines life outcomes.
Interestingly, research suggests the general population is indeed aware of how essential
willpower is to their wellbeing; survey participants routinely identify a ‘lack of willpower’ as
the major impediment to making beneficial life changes. There are, however,
misunderstandings surrounding the nature of willpower and how we can acquire more of it.
There is a widespread misperception, for example, that increased leisure time would lead to
subsequent increases in willpower.

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B. Although the concept of willpower is often explained through single-word terms, such
as
‘resolve’ or ‘drive’, it refers in fact to a variety of behaviours and situations. There is a common
perception that willpower entails resisting some kind of a ‘treat’, such as a sugary drink or a
lazy morning in bed, in favour of decisions that we know are better for us, such as drinking
water or going to the gym. Of course this is a familiar phenomenon for all. Yet willpower also
involves elements such as overriding negative thought processes, biting your tongue in social
situations, or persevering through a difficult activity. At the heart of any exercise of willpower,
however, is the notion of ‘delayed gratification’, which involves resisting immediate
satisfaction for a course that will yield greater or more permanent satisfaction in the long run.
C. Scientists are making general investigations into why some individuals are better able
than others to delay gratification and thus employ their willpower, but the genetic or
environmental origins of this ability remain a mystery for now. Some groups who are
particularly vulnerable to reduced willpower capacity, such as those with addictive
personalities, may claim a biological origin for their problems. What is clear is that levels of
willpower typically remain consistent over time (studies tracking individuals from early
childhood to their adult years demonstrate a remarkable consistency in willpower abilities). In
the short term, however, our ability to draw on willpower can fluctuate dramatically due to
factors such as fatigue, diet and stress. Indeed, research by Matthew Gailliot suggests that
willpower, even in the absence of physical activity, both requires and drains blood glucose
levels, suggesting that willpower operates more or less like a ‘muscle’, and, like a muscle,
requires fuel for optimum functioning.
D. These observations lead to an important question: if the strength of our willpower at the age of
thirty-five is somehow pegged to our ability at the age of four, are all efforts to improve our willpower certain
to prove futile? According to newer research, this is not necessarily the case. Gregory M. Walton, for example,
found that a single verbal cue – telling research participants how strenuous mental tasks could ‘energise’ them
for further challenging activities – made a profound difference in terms of how much willpower participants
could draw upon to complete the activity. Just as our willpower is easily drained by negative influences, it
appears that willpower can also be boosted by other prompts, such as encouragement or optimistic self-talk.
E. Strengthening willpower thus relies on a two-pronged approach: reducing negative influences and
improving positive ones. One of the most popular and effective methods simply involves avoiding willpower
depletion triggers, and is based on the old adage, ‘out of sight, out of mind’. In one study, workers who kept a
bowl of enticing candy on their desks were far more likely to indulge than those who placed it in a desk
drawer. It also appears that finding sources of motivation from within us may be important. In another study,
Mark Muraven found that those who felt compelled by an external authority to exert self-control experienced
far greater rates of

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willpower depletion than those who identified their own reasons for taking a particular course
of action. This idea that our mental convictions can influence willpower was borne out by
Veronika Job. Her research indicates that those who think that willpower is a finite resource
exhaust their supplies of this commodity long before those who do not hold this opinion.
F. Willpower is clearly fundamental to our ability to follow through on our decisions but,
as psychologist Roy Baumeister has discovered, a lack of willpower may not be the sole
impediment every time our good intentions fail to manifest themselves. A critical precursor,
he suggests, is motivation – if we are only mildly invested in the change we are trying to make,
our efforts are bound to fall short. This may be why so many of us abandon our New Year’s
Resolutions – if these were actions we really wanted to take, rather than things we felt we
ought to be doing, we would probably be doing them already. In addition, Muraven
emphasises the value of monitoring progress towards a desired result, such as by using a
fitness journal, or keeping a record of savings toward a new purchase. The importance of
motivation and monitoring cannot be overstated. Indeed, it appears that, even when our
willpower reserves are entirely depleted, motivation alone may be sufficient to keep us on the
course we originally chose.
Questions 27-33

Do the following statements agree with the information given in Reading Passage? In boxes

14-20 on your answer sheet, write

TRUE If the statement agrees with the information FALSE If the statement contradicts

the information NOT GIVEN If there is no information on this

27. Willpower is the most significant factor in determining success in life.

28. People with more free time typically have better willpower

29. Willpower mostly applies to matters of diet and exercise.

30. The strongest indicator of willpower is the ability to choose long-term rather than
short-term rewards.

31. Researchers have studied the genetic basis of willpower.

32. Levels of willpower usually stay the same throughout our lives.

33. Regular physical exercise improves our willpower ability.

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Questions 34-38

Look at the following statements and the list of researchers below. Match each

statement with the correct person, A–D.

NB You may use some letters more than once. This researcher …

34. identified a key factor that is necessary for willpower to function.

35. suggested that willpower is affected by our beliefs.

36. examined how our body responds to the use of willpower.

37. discovered how important it is to make and track goals.

38. found that taking actions to please others decreases our willpower.

39. found that willpower can increase through simple positive thoughts.

List of People

A Matthew Gailliot

B Gregory M. Walton

C Mark Muraven

D. Veronika Job

E. Roy Baumeister

Question 40 Which of the following is NOT mentioned as a factor in willpower? Willpower is affected by:

A physical factors such as tiredness

B our fundamental ability to delay pleasure

C the levels of certain chemicals in our brains

D environmental cues such as the availability of a trigger

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