Question

When economic times get tough, some businesses experience downturns that lead to the loss of jobs or going out of business. However, there are some businesses that survive and often thrive as a result of economic struggles. Drawing on what you have learned so far, what type of products or business would survive in a recession? Please discuss individual behavior theory in support of your choice

Answer 1

• in recession,people are generally panic which is a natural behavior because they are afraid of losing their jobs,spending their savings and emergency funds.in this situation,they would curtail their demand which is non essential in nature.this situation have been observed recently during the covid-19 pandemic.

• as per consumer behavior people demanded only those things which are required for their survival.therefore we can conclude that only those kind of businesses can survive in recession and depression which have inelastic demand curve,which implies that increase and decrease of price won't affect the quantity demanded in the economy.

some businesses which have inelastic demand are as follow-

1. businesses concerned with grocery items and FMCG (fast moving consumer goods)
2. fuel and gasoline industries
3. medicines and healthcare industries
4. telecom industries
5. business concerned with power supply like electricity provider