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

question 53

Multiple Choice

Mex,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.Mex 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:

Current Price

The market value of an asset or security at a specific point in time.

Exchange Ratio

The rate at which one company's shares are exchanged for another's in the event of a merger or acquisition.

Exercise Price

The price at which the holder of an options contract may buy or sell the underlying security.

Aggregate Supply Curve

The graphical representation of the total goods and services that producers in an economy are willing to sell at various price levels.