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) break-even points
B) the price inelasticity ratio
C) the income effect
D) the target return effect
E) cross-price elasticity

Question

Quizplus · Accepted Answer

Rodi observed that during a poor economy, customers keep their high-mileage cars longer. This suggests that their income may be constrained, leading to an income effect where they prioritize repairs over purchasing a new car.

Rodi Owns Hallman's Auto Repair Service