Joan argues that income (either individual or household income) is more important than the price of...

Joan argues that income (either individual or household income) is more important than the price of a good or service when we make a consumption decision. Do you agree with Joan? Why? Provide your own thought.

Expert Solution

Yes I agree with Joan.

REASON

I believe that income is the most important factor than the price of goods and services when we make a consumption decision. We can explain this fact by the impact of income on the consumer choice theory. Income has a significant effect on the consumer's choice and the income of an individual will affect the preferences of the products to be Chosen.

The people will plan their consumption on the basis of the income. For example a man with a high income will always prefer the standardized products. And when the income of the consumer increases he will demand for more and more standard goods. The goods and services offered at different prices will be opted by the consumer in accordance with the income. By this a consumer with a high income will always seek for the most standardized goods which will be more expensive.

On the other hand the people with low income will always opt the Product which suits their income, they want to balance their expense with the current income achieved by them. Hence I believed that income is more important than the price of goods and services in a consumption made by a consumer.

Rahul Sunny answered 2 years ago

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