Joe goes to the grocery store to buy steak. He expects that he will be spending $5.99 per pound for his steak as there is only o
ne brand to choose from and their price has remained the same for about a year. However, to Joe’s surprise, the grocery store has begun selling a generic store brand of the same cut of steak for $3.99 per pound. Joe decides that to save the $2.00 per pound he will try to store brand steak. Based on the information provided above, which of following terms bests describes the scenario that occurred? a. Income effect b. Substitution effect c. Change in quantity demanded d. Change in quantity supplied
I believe the answer would be the last option. A resource has value, and people are willing to pay for it most likely because the resource is scarce. When a resource is not enough or the supply is low as compared to its demand, then most likely that price or value of it would increase.
