Sweet Tooth Confectioners May Use the Same Ingredients as Most

question 220

Multiple Choice

Sweet Tooth Confectioners may use the same ingredients as most other producers of chocolate candies and may not even be much better than other well-known brands of chocolate. However, the company wraps its candies in expensive-looking foil and places them in very attractive boxes. It promotes its products in advertisements as "the ultimate in chocolate experience." Sweet Tooth charges a much higher price than most competitors, but sales continue to grow. This success indicates that

• A) consumers always behave in an irrational manner.
• B) there is more to the total product offer than the physical product.
• C) consumers seldom consider price when making a buying decision for goods such as chocolate.
• D) chocolate is best classified as a convenience good.

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Definitions:

Total Surplus

The sum of consumer and producer surplus; represents the total net benefit to society from the production and consumption of a good or service.

Deadweight Loss

Economic efficiency is lost when the balance for a good or service is either not met or unattainable.

Tariff

A tax imposed on imported goods and services to regulate trade, increase government revenue, or protect domestic industries.

Consumer Surplus

The variance between the sum consumers are inclined and can afford to pay for a good or service and the sum they genuinely pay.