Manny's Bar-N-Grill Is Next Door to a Franchised Fast-Food Restaurant

Multiple Choice

Manny's Bar-n-Grill is next door to a franchised fast-food restaurant near a busy freeway exit. Essentially, the menus, food quality, atmosphere, and service are equal at the two restaurants. Nevertheless, the nationally franchised restaurant can attract more customers, even though its prices are higher. This situation

A) indicates that people are irrational because it never makes sense to pay a higher price when a product is cheaper elsewhere.
B) is one in which the national franchise provides uninformed consumers with valuable information that reduces their risk of being unsatisfied with the purchase.
C) reflects the greater elasticity of supply for food at Manny's Bar-n-Grill relative to the nationally franchised restaurant.
D) is inconsistent with the basic postulates that underlie the economic way of thinking.