As Srikanth already said, the assets path should be referenced. As an example you could put <%= image_tag 'rails.png' %> within your code and check firebug (or inspect element within chrome) to check the result.
I'm not quite sure why your code is not working, since I can see you followed Agile Web Development with Rails. I got the depot application running without problems. In your table I see you 'Product1', 'Product2' and 'Product3', is this what you actually filled in within the image_url text_field? What happens if you change 'Product1' to 'product1.jpg'?
On a side note, if you want to use Paperclip, your call should look like this:
<%= image_tag(product.image.url, class: 'list_image') %>