Reference no: EM132402513

Based on  two broad groups of economic factors; households and firms. In our study of demand, we looked at households as consumer units affecting demand for goods and services in the product market. On the supply side of the product market are the economic (or business) firms that are the producers (and sellers) of goods and services. 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.

The statement: After reading the chapter on The Theory of Individual Behavior I believe grocery stores are businesses that would survive in a recession. As stated in the book, there are two important factors we have to consider when it comes to consumer behavior. Consumer opportunities are goods and services that a consumer can afford to purchase. Consumer preferences dictates which of the goods will be consumed. These two factors are very different from each other. While one would prefer to go out to eat at a nice restaurant during a recession, one cannot because of their financial circumstances. Instead, they would much rather visit a grocery store and purchase goods at a low cost for dinner. Regardless of a recession everyone needs to eat, therefore gorcery stores would stay in business. In fact the grocery store businesses would actually see an increase in sales and product because people will choose to purchase more groceries rather than dine out. Budget constraints will play a big factor during a recession. Consumers will be forced to budget and it is very likely that dinning out will not be apart of that budget. This type of business will never go out of business no matter what the economy is like. 

What do you think the statement that I mentioned above? Do you agree or disagree and why?