Question

The chart below shows the economic cost of two school lunch What is the most likely explanation for why the healthier lunch costs more?

Answer 1

The healthier option has been offered as a substitute to 'ordinary options', which has been developed to serve a previously unmet demand.

The higher price of the healthy option can be explained for two different reasons:

• The market price of unhealthy foods is very cheap. If a healthy option wants to be delivered to students, more expensive healthy ingredients will have to be purchased and, hence, a larger price will have to be charged if the cafeteria at school wants to make some profit from selling those lunches.
• A healthy lunch might be perceived as a 'higher quality' alternative and consumers can perceive that eating it positions them somehow in a higher status and the would be willing to pay a higher price for it.