Sonja's Sub Shop is located in a business district that has few customers on the weekend. To attract customers on Saturday and Sundays, it reduces its prices on these two days. This is an example of
A)dynamic pricing.
B)the substitution effect.
C)the income effect.
D)the target return effect.
E)cross-price elasticity.

Question

Quizplus · Accepted Answer

This is an example of dynamic pricing, which is the practice of adjusting prices based on factors such as demand, competition, and time. In this case, Sonja's Sub Shop is adjusting its prices on the weekends to attract more customers during a time when there is typically less demand.

Sonja's Sub Shop Is Located in a Business District That