Question

A firm selling televisions knows from marketing research that when consumers in developing countries reach on average a yearly income equivalent to $1,000 they are more likely to purchase one of their televisions. Such a low income is sometimes enough because

Answer 1

Answer:

That low income can be enough because of either one of these two reasons (or the two at the sime time):

• A high proportion of subsidized good for low-income earners in developing countries: a consumer making $1,000 per year on average could benefit from subsidized food, housing, healthcare, and even transportation, allowing this person to devote most of his income to other expenses.
• Cheap credit available: this same person could not have enough money to pay for the television in cash, but could easily obtain a credit with low interest rates, and long-term payments.