Firms would rather shrink package sizes than raise prices because consumers will feel less of a loss from the change in package size.

Question

Quizplus · Accepted Answer

Consumers are generally more sensitive to price changes than to changes in package size, making it a common strategy for firms to reduce package size while maintaining or slightly increasing the price to manage costs without significantly impacting perceived value.

Firms Would Rather Shrink Package Sizes Than Raise Prices Because