Monday, October 17, 2011

Demand

PxQ=TR
Substitute- a replacement, inverse relationship with the product
Compliment- a good used in harmony with the product, direct relationship

Why can Benny sell more burgers at 1 dollar than 5 dollars?
According to the law of demand, Benny can sell more burgers at a cheaper price because the lower price of a good translates into a higher demand. By selling a cheaper burger, his customers have to give up less to purchase his good. Therefore the opportunity cost decreases.

Why can Benny sell more burgers at 1 dollar, than Sally can sell salads at 1 dollar?
Because there is more demand for burgers than salads.

Factors of demand of burgers:
Taste, Income, number of consumers, expectations,  and price of related goods

What is the relationship between total revenue and demand?
The two have have a direct relationship.

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