Sales of more expensive organic produce tend to increase when the economy is doing well, while sales of lower-priced store brand produce increase when the economy is not doing well. This is an example of how ________ impacts demand for products.
A)dynamic pricing
B)the price inelasticity coefficient
C)the income effect
D)the target return effect
E)cross-price elasticity

Question

Quizplus · Accepted Answer

The scenario described is an example of the income effect, where consumers' demand for products is influenced by changes in their income levels. When the economy is doing well, consumers may have more disposable income and be more willing to spend money on higher-priced organic produce. Conversely, when the economy is not doing well and consumers have less disposable income, they may opt for lower-priced store brand produce.

Sales of More Expensive Organic Produce Tend to Increase When