Question

1. Why is the typical demand curve downward sloping?

2. Amy goes to the movies several times a month. Currently the price of a movie ticket is $12 and she goes 3 times a month. Sometimes, the theater runs a promotion and the ticket price drops to $8. When this happens, Amy attends the movies 4 times a month. However, there are rumors that the movie theater is going to increase their prices to $15. If this happens, Amy will only go twice a month. Draw Amy’s demand curve for movie tickets.

3. Why does demand not change when the price of a good changes with no change in the other influences on buying plans?

4. Leela decorates boots and sells them online. When the price is $17, she is willing to sell 10 boots a month. If the price rises to $19, she is willing to sell 14 boots a month but if the price is $16, she is only willing to sell 8 boots. Draw Leela’s supply curve for boots in a month.

Bonus: Assume something in the market causes supply to decrease and demand to increase, which causes an increase in both price and quantity. Which change was greater, supply or demand? How do you know?

Answer 1