Eunice Consumes Coke Exclusively

question 70

Multiple Choice

Eunice consumes Coke exclusively.She claims that there is a clear taste difference and that competing brands of cola leave an unsavory taste in her mouth.However,in a blind taste test,Eunice is found to prefer generic store-brand cola to Coke eight out of ten times.The results of Eunice's taste test would reinforce claims by critics of brand names that

• A) consumers are always willing to pay more for brand names.
• B) brand names cause consumers to perceive differences that do not really exist.
• C) brand names cause consumers to be more sensitive to product differences.
• D) brand names are a form of socially efficient advertising.

---

Definitions:

Real GDP

An inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, expressed in base-year prices, to reveal the true growth rate.

Intermediate Good

A product used to produce a final good or finished product, also known as a semi-finished product.

Direct Tax

Tax on a particular person. Most important are federal personal income tax and payroll (Social Security) tax.

Excise Tax

A tax imposed on specific goods, services, or transactions, often included in the price of products like gasoline, alcohol, and tobacco, aimed at reducing their consumption or raising revenue.