Related to the Economics in Practice on p. 125: Suppose Store ABC runs an ad claiming to have "low prices everyday." They even demonstrate that the total expenditure for a basket of groceries is less at their store than at any of their competitors. Which of the following statements is not true?
A) You would clearly be better off shopping at Store ABC.
B) Your preferences may not be consistent with the basket used by Store ABC (in their example), thus it is not clear whether or not you would be better off shopping at Store ABC or not.
C) Even if your preferences are generally consistent with the basket used by Store ABC, it may still be possible for you to substitute other similar goods for those in the basket used by Store ABC (in their example) and thus spend less at another store.
D) All of the above statements are true.

Question

Quizplus · Accepted Answer

The claim made by Store ABC suggests that their prices are consistently low and lower than those of their competitors, which implies that a consumer will always spend less money by shopping there. This assumes that the consumer values each item in the basket in the same way as the store does, which may not be the case. However, based on the information provided, it is reasonable to believe that a consumer would be better off shopping at Store ABC than at their competitors, since the example used shows a lower total expenditure.

Related to the Economics in Practice on P