Question

At katie's crunchies, a specialty snack shop, customers routinely buy a bag of toffee-covered pretzels for $3.00. if consumers purchase one bag of toffee-covered pretzels at $3.00, then why don't they keep buying more and more bags for $3.00 until the store sells out?

Answer 1

Customers don't keep buying more bags of toffee-covered pretzels at $3.00 because of price elasticity of demand. If the price increases, the demand decreases.

Step-by-step explanation:

The reason customers don't keep buying more and more bags of toffee-covered pretzels for $3.00 until the store sells out is because of the concept of price elasticity of demand. Price elasticity of demand measures how responsive the quantity demanded is to changes in price. In this case, the demand for the toffee-covered pretzels is likely to be relatively price inelastic, which means that the quantity demanded doesn't change significantly in response to changes in price.

Customers might buy one bag of pretzels for $3.00 because they perceive it as a fair price for the product. However, if the price increased, they might reconsider their purchase or switch to a different snack option. The demand for the product would decrease as the price increases, and customers would not continue to buy more and more bags at $3.00 each.