Price changes impact how people make choices when shopping. When prices go down, people usually buy more of that product. This idea is called the law of demand. For example, if the price of an item drops by 10%, people might buy about 15% to 20% more of it. This depends on how sensitive people are to price changes.
Here are two main reasons why price changes affect buying habits:
Substitution Effect: When a product gets cheaper, people might choose it over other, more expensive options. For instance, if chicken costs 20% less, shoppers may buy more chicken and less beef.
Income Effect: When prices drop, it's like people have more money to spend. They can buy more things than before. If the price of a common item goes down, shoppers might use that extra "money" to buy other items, making them happier overall.
These changes show how price drops make people think differently about what they want to buy and how they can get the most value for their money.
Price changes impact how people make choices when shopping. When prices go down, people usually buy more of that product. This idea is called the law of demand. For example, if the price of an item drops by 10%, people might buy about 15% to 20% more of it. This depends on how sensitive people are to price changes.
Here are two main reasons why price changes affect buying habits:
Substitution Effect: When a product gets cheaper, people might choose it over other, more expensive options. For instance, if chicken costs 20% less, shoppers may buy more chicken and less beef.
Income Effect: When prices drop, it's like people have more money to spend. They can buy more things than before. If the price of a common item goes down, shoppers might use that extra "money" to buy other items, making them happier overall.
These changes show how price drops make people think differently about what they want to buy and how they can get the most value for their money.