Two bottles of over-the-counter pain reliever sit side-by-side in a grocery store: Advil (a brand name) sells for $5.00, while Feel Better (not a brand name) sells for $2.50. In a typical day the store sells some of each type of pain reliever, which suggests that
A)no rational consumer would spend twice as much for Advil as he would for Feel Better.
B)some consumers must perceive that Advil is a higher quality product.
C)Advil has no incentive to maintain the quality of its product just because of the Advil brand name.
D)Advil spends money on advertising to reduce competition in the market.

Question

Quizplus · Accepted Answer

The fact that the store sells both Advil and Feel Better suggests that some consumers perceive Advil to be a higher quality product, given its higher price. This is likely due to branding and marketing efforts by the company. However, it doesn't necessarily mean that Advil has no incentive to maintain quality or spends money on advertising to reduce competition in the market.

Two Bottles of Over-The-Counter Pain Reliever Sit Side-By-Side in a Grocery