Managers of Wendy's fast-food restaurants keep track of prices at competitors such as McDonald's, Burger King, and Arby's knowing that a decrease in the prices at these other fast-food restaurants will
A)increase the income effect for Wendy's products.
B)increase demand for Wendy's products.
C)decrease the income effect for Wendy's products.
D)increase the complementary effect for Wendy's products.
E)decrease demand for Wendy's products.

Question

Quizplus · Accepted Answer

A decrease in prices at competitors like McDonald's, Burger King, and Arby's makes those options more attractive to consumers, leading to a decrease in demand for Wendy's products as consumers may choose the cheaper alternatives.

Managers of Wendy's Fast-Food Restaurants Keep Track of Prices at Competitors