South Spice,a Restaurant,makes All Its Menu Items from Scratch and Uses

question 86

Multiple Choice

South Spice,a restaurant,makes all its menu items from scratch and uses authentic Mexican herbs in its dishes.As a result of its focus on using specialty ingredients,prices are 75% higher than its competitors.South Spice knows that

• A)the higher the price,the better its perceived quality.
• B)people always pay more for items that are unfamiliar to them.
• C)people think that the competitor's food is priced too low.
• D)experience has taught consumers to ignore prices.

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Definitions:

Interest Rate

The percentage of an amount of money charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage rate.

Investment Tax Credit

A fiscal policy tool used to encourage companies to invest by providing a tax rebate on their investments.

Equilibrium

A state in a market where supply equals demand, and there is no incentive for price to change, leading to market stability.

Interest Rate

A lender's charge to a borrower, represented as a percentage of the principal amount, for the privilege of borrowing assets.