For many products, such as fast foods, a variety of prices can be found, but sellers with higher prices can expect to sell their products because
A)consumers are not sensitive to prices.
B)arbitrage will quickly eliminate price differences.
C)firms differentiate products in many ways, for example, higher-priced fast food restaurants may offer better service.
D)their demand is perfectly inelastic.

Question

Quizplus · Accepted Answer

Fast food restaurants can differentiate their products in many ways, such as offering better service or a more comfortable environment. Some consumers may be willing to pay more for these additional benefits, even though they could get similar food at a cheaper price elsewhere. This is known as product differentiation and is a common strategy in many markets. Therefore, sellers with higher prices can still expect to sell their products, despite the availability of lower-priced alternatives.

For Many Products, Such as Fast Foods, a Variety of Prices