Two college students, Mary and Maggie, are spending spring break in Florida. Mary buys a cup of coffee each morning at the local Starbucks rather than from one of the local coffee shops. Maggie claims that Mary is irrational because she never purchases Starbucks coffee at home, and Starbucks coffee costs more than the coffee sold by local shops. An economist would most likely explain Mary's behavior by suggesting that
A)Mary's behavior is rational, but Maggie's behavior is clearly irrational.
B)Mary's behavior is clearly irrational, but Maggie's behavior is rational.
C)the Starbucks brand name suggests consistent quality.
D)the advertising by Starbucks in Florida is more persuasive than the advertising by Starbucks in Mary and Maggie's home town.

Question

Quizplus · Accepted Answer

The economist would suggest that Mary's behavior is rational because the Starbucks brand name suggests consistent quality. Mary may be willing to pay a premium for the assurance of quality that comes with the Starbucks brand, even though it may be more expensive than other coffee shops. The fact that Mary does not purchase Starbucks at home does not necessarily mean her behavior is irrational, as there may be other factors at play such as availability or convenience.

Two College Students, Mary and Maggie, Are Spending Spring Break