Chapter EMB, Problem 6MCQ

To determine

To choose: The option that states the reason for the royal palace restaurant charging higher prices.

Answer to Problem 6MCQ

The correct option is c, i.e., Framing.

Explanation of Solution

Framing is the creation of a context for a product or idea. Many authors found that a typical consumer would pay no more than $1.50 for a good brand of beer from a grocery store, but would pay up to $2.65 for an identical beer from a fancy hotel, even if a friend was bringing the beer from either source to the consumer to drink at a beach. Brand managers spend millions of dollars to frame their brand names because, for example, consumers perceive apparel differently after seeing Olympic skier ABC wear it, and they perceive a hotel differently knowing that a particular singer xyz stays there. Consumers pay more for a cup of coffee at S restaurant than at MD’s, restaurant, not because S’s coffee itself is necessarily better (a Consumer Reports taste test suggests that MD’s coffee is better), but because of the image and ambiance in which S’s coffee is framed.

So, the correct option is c, i.e., Framing.

Economics Concept Introduction

Introduction:

Framing is the creation of a context for a product or idea.