The Strategy of Segmenting Demand to Reduce Variation Makes Use

question 28

True/False

The strategy of segmenting demand to reduce variation makes use of the fact that demand for a service seldom is derived from a homogeneous source.

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute one good for another more or less expensive good.

Income Effect

The change in an individual's or an economy's consumption resulting from a change in real income.

Normal Good

A product whose demand increases as consumer income rises, indicating a direct relationship between income and demand for the good.

Income Effect

The change in an individual's or economy's consumption patterns resulting from a change in real income.