Question

According to the caselet, can Café CRANDON reduce costs by changing the product? Discuss.

Answer 1

Answer:

What is Product Constancy?

Product constancy means the consistency of the product even though there is an increase or decrease in its price. You can also call product constancy as inverse proportionality. In product constancy, you have to reduce the consumption when there is an increase in price so that your budget remains the same.

Product constancy

Suppose you have a situation where the price of a product has risen by 25%. But you need to keep your total expenditure constant. So, what would you do? You will try and manage the only thing that is in your hand i.e. consumption. You can reduce the consumption accordingly so that whatever there is an increase in price, the total expenditure will remain same. Here as mentioned, the price of the product is increased by 25% so what should be the decrease in consumption to meet your expenses?