Rodi owns Hallman's auto repair service. He has observed over the years that customers keep their high-mileage cars longer when the economy is doing poorly, creating demand for his maintenance and repair service. Rodi has observed the impact of ______________ on demand for his service.
A) breakeven points
B) the price inelasticity ratio
C) the income effect
D) target profit pricing
E) cross-price elasticity

Question

Quizplus · Accepted Answer

Rodi has observed that customers' behavior is influenced by changes in the economy, specifically the impact on their income. This suggests that the income effect is affecting demand for his service. A) Breakeven points and D) Target profit pricing are not relevant to the scenario. B) Price inelasticity ratio and E) Cross-price elasticity are not mentioned and therefore cannot be determined from the given information.

Rodi Owns Hallman's Auto Repair Service