Case Page 126[1] - Economists have used the wealth effect...

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Case Page 126 Economist is the past used economic theory to explain consumer behavior in terms of what effect will be created if consumer wealth increases or decreases. How their personal preferences, spending and saving habit will all together change. By doing so it was fairly simple for economist to predict consumer demand. However, as technology increases and businesses as well as consumer rely and use more of it, economists are finding it difficult to accurately predict and measure between quality, price and value for product such as telephone services , illegal music download etc.
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Unformatted text preview: Economists have used the wealth effect theory in the past to predict consumer demand. However, this theory failed to explain consumer’s behavior after the stock market crashed in 2000-2002. In addition, because of the widespread use of technology especially in the service sector, government statistician are finding it difficult to accurately measure and judge productivity growth, quality and value that consumer places on some services, thus making it impossible to track consumer demand....
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This note was uploaded on 11/13/2011 for the course MIS 4100 taught by Professor Maxnorth during the Spring '11 term at Birmingham-Southern College.

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