A restaurant's offer of free children's meals in an effort to attract the parents' business is an example of
A) a loss in revenue.
B) a loss leader.
C) the substitution effect.
D) a marginal decision.

Question

Quizplus · Accepted Answer

A loss leader is a pricing strategy where a product is sold at a price below its market cost to stimulate other sales of more profitable goods or services. In this case, offering free children's meals is intended to attract parents who will purchase their own meals, thereby generating overall profit despite the initial loss on the children's meals.

A Restaurant's Offer of Free Children's Meals in an Effort