Question

1. Made the right way with fresh ingredients, boeuf bourguignon (look it up!) is the best thing ever. Your friend Ella Marija Lani Yelich-O'Connor has abandoned her music career to open a bistro, which specializes in boeuf bourguignon and other French food, including crème brulee. She has done some market research and finds that your neighbors value boeuf bourguignon dinners according to the following schedule:

Servings	MU boeuf bourguignon
1	$60.00
2	$58.00
3	$56.00
4	$54.00
5	$52.00
6	$50.00
7	$48.00
8	$46.00
9	$44.00
10	$42.00
11	$40.00
12	$38.00
13	$36.00
14	$34.00

1a. Graph the demand curve for boeuf bourguignon. Does the demand curve have a positive or negative slope? Why?

2a. How many servings will Ella sell at $52? How many at $46?

3a. What will happen to the demand curve if a new study comes out showing beef and potatoes (ingredients in boeuf bourguignon) are really bad for you? What will happen to the demand curve if instead a study comes out showing Ella’s crème desert cures cancer?

Answer 1

1 a)

The demand curve has a negative slope. The law of demand states that quantity demanded has an inverse relationship with price. When the price rises, quantity demanded falls and vice-versa.

2 a)

When the price is $52, 5 servings will be sold.

When the price is $46, 8 servings will be sold.

3 a)

When beef and potatoes are bad for health, the demand curve will shift inwards to the left.

The demand curve will shift to the right as both food are complements.