Dave is undecided about whether to eat at a restaurant or to order pizza at home. He then obtains a coupon for 20 percent off at the restaurant and decides to go there to eat. This is an example of
A) someone using criteria other than price to make a consumption decision.
B) a lower price leading a consumer to substitute more of the less expensive good for the relatively more expensive good.
C) a lower price leading a consumer to buy more of a good because of the income effect.
D) a consumer making a decision irrationally.

Question

Quizplus · Accepted Answer

The coupon for 20 percent off at the restaurant represents a lower price for eating at the restaurant, which led Dave to substitute more of the less expensive restaurant food for the relatively more expensive pizza at home. Therefore, this is an example of a lower price leading a consumer to substitute more of the less expensive good for the relatively more expensive good.

Dave Is Undecided About Whether to Eat at a Restaurant