Chapter 17 Question ○ one two

Why do many bars charge money for drinking water, but provide free peanuts? Some bars sell a glass of water for four yuan, but you can ask for free salted peanuts.Peanuts must be more expensive to produce than water, so what the hell is going on? The key to understanding this practice is figuring out how water and salted peanuts affect the demand for alcoholic beverages, the core product of these bars.Peanuts and wine are complementary.The more peanuts a drinker eats, the more beer or liquor he will order.Since peanuts are relatively cheap and each alcoholic beverage generates a relatively healthy profit margin, providing free peanuts can boost a bar's bottom line.

Conversely, water and wine are incompatible.The more water a drinker drank, the less wine he ordered.Therefore, even though water is relatively cheap, bars still have to set a high price for it to discourage customers from spending.