Price-conscious shoppers still buy the smaller thing if it's cheaper per oz (and only if the stores show the price per oz on the shelf), but most people just get the bigger size because that's how much they want to consume, and they can't really tell that the 15% increase in size does not equate to 19% increase in cost.
Many stores would stock the family size separate from the regular size so the shoppers couldnt easily compare price per oz.
Eventually the family size just becomes the regular size, but now at the higher price. Then the shrinking happens again.
Legal requirement that they do in the UK (though in metric units), so it's £/L and £/Kg (or for smaller items per 100g and then some nuance on unit prices for things not sold by weight/volume).
It does make their shenanigans with multipacks and such way more obvious by design.
> The PMO also requires traders, where applicable, to display the ‘unit price’ – which is the price which would be charged for the relevant unit of the goods, depending upon how the goods are sold. Unit pricing can be a useful tool for consumers. It allows consumers to compare the price and value of similar products. This can be helpful when making a decision between similar products that are sold in different sizes or quantities.
https://www.gov.uk/government/publications/price-marking-ord...