Two Bags of Chips Sit Side-By-Side in a Grocery Store

question 235

Multiple Choice

Two bags of chips sit side-by-side in a grocery store: Ruffles (a brand name) sells for $3.00,while Crunchy Chips (not a brand name) sells for $1.50.In a typical day the store sells some of each type of chips,which suggests that

• A) no rational consumer would spend twice as much for Ruffles as he would for Crunchy Chips.
• B) some consumers must perceive that Ruffles is a higher quality product.
• C) Ruffles has no incentive to maintain the quality of its product just because of the Ruffles brand name.
• D) None of the above is correct.

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