Question

Sales of national brands of orange juice tend to increase when the economy is doing well and consumers are earning more, while sales of generic orange juice increase when the economy is not doing well and consumers are earning less. among industry members this is called the "orange juice indicator." this is an example of how __________ impacts demand for products.

Answer 1

The Income effect

Step-by-step explanation:

The income effect describes how changes in income affects the level of demand. When the purchasing power of an individual increases, the individual tends to spend more and when that purchasing power decreases, the individual tend to spend less. The purchasing power is a factor of thr income level. In this case, whenever the purchasing power of individuals increases, they tend to spend more and the purchase of those generic product reduces. But when income or purchasing power reduces, there's an increase in the demand for generic products.

Generic products are products that typically lacks brand name or logo and are sold at cheaper prices than normal products.

Answer 2

The income effect

Step-by-step explanation:

The income effect is how real income is affected when there is change in price of goods and services.

Assuming income remains constant, as price falls income is able to purchase more goods and services, and as price increases the income will buy less of goods and services.

Also when people earn more they tend to buy more products.

In this case when the economy bis doing well and incomes increase sales of national brand of orange juice rises. The sales of generic orange juice however falls.

This shows that if there is enough money people prefer to by national brand of juice than generic orange juice.