Justine's Reference Price Dilemma

Justine's Dilemma at the Meat Counter

Justine went to the specialty grocery store by her office after work. When looking at the offerings at the meat counter, she was surprised to see ground beef selling for $4.49/lb. At her normal grocery store, she can get the same quality beef for $3.29/lb., a price Justine feels is reasonable. $3.29/lb. for ground beef is Justine's __________.

What is Justine's $3.29/lb. Price Called?

Answer:

The correct answer is reference price.

Explanation:

Consumers generally tend to compare the price of all the products. They purchase the product that they find priced reasonably and fairly. The product price that consumers use to make a comparison is called the reference price.

It is generally a previously advertised product or a competitor's product that is used for reference purposes. The reference price is considered justified by consumers.