Consumer Choice & Behavioral Market Structures

Finding a Toothbrush

A customer is having trouble identifying a new toothbrush to help with his tartar problem. With all the options available, some companies advertise as being good at fighting plaque while others focus on tartar prevention. When consumers have a lot of options, it’s sometimes hard to fully consider the tradeoffs. This paradox of choice can explain why some people don’t behave rationally when presented with a seemingly overwhelming number of options.

Market Structures

Señor Cloud Salsa

Cloud 9 has developed their own brand of salsa called Señor Cloud Salsa. In an attempt to seem more authentic, the store manager is looking for employees to offer samples to customers. Glenn believes this will be a key selling point that differentiates their store brand from more recognizable substitutes in the store. Successful product differentiation gives firms some market power and the ability to charge a price greater than marginal cost.