Exercise 1: Shifts in the Demand Curve. In recent years, sales of music CDs have decreased as many consumers have elected to download individual tracks of music directly into their playing devices. Of course, the cost to download a single track is less than the cost of a CD. The demand for music CDs is shown in the demand schedule as D1. Imagine that as a result of pressure from the music industry, music downloads are outlawed, and the only way to purchase music is to buy a music CD. Demand for CDs increases and is now shown in the demand schedule as D2. Using the data presented in the Demand Schedule for CDs, graph the demand curves D1 and D2 in the chart below. Refer to the chart you have drawn and answer the following questions: 1. When CDs sell for $18, compare the quantity demanded for CDs at demand levels D1 and D2. 2. Explain why more customers are now willing to purchase CDs for the same price. 3. When demand increases at all price levels, the demand curve shifts in which direction: right or left? 4. Explain the difference between an increase in demand and increase in the quantity demanded. a. Which is depicted as a movement along the demand curve? b. Which is depicted as a shift in the demand curve?
Exercise 1: Shifts in the Demand Curve. In recent years, sales of music CDs have decreased as many consumers have elected to download individual tracks of music directly into their playing devices. Of course, the cost to download a single track is less than the cost of a CD. The demand for music CDs is shown in the demand schedule as D1. Imagine that as a result of pressure from the music industry, music downloads are outlawed, and the only way to purchase music is to buy a music CD. Demand for CDs increases and is now shown in the demand schedule as D2. Using the data presented in the Demand Schedule for CDs, graph the demand curves D1 and D2 in the chart below. Refer to the chart you have drawn and answer the following questions: 1. When CDs sell for $18, compare the quantity demanded for CDs at demand levels D1 and D2. 2. Explain why more customers are now willing to purchase CDs for the same price. 3. When demand increases at all price levels, the demand curve shifts in which direction: right or left? 4. Explain the difference between an increase in demand and increase in the quantity demanded. a. Which is depicted as a movement along the demand curve? b. Which is depicted as a shift in the demand curve?
Chapter6: Elasticities
Section: Chapter Questions
Problem 5P
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Exercise 1: Shifts in the Demand Curve.
In recent years, sales of music CDs have decreased as many consumers have elected to download individual tracks of music directly into their playing devices. Of course, the cost to download a single track is less than the cost of a CD. The demand for music CDs is shown in the demand schedule as D1.
Imagine that as a result of pressure from the music industry, music downloads are outlawed, and the only way to purchase music is to buy a music CD. Demand for CDs increases and is now shown in the demand schedule as D2. Using the data presented in the Demand Schedule for CDs, graph the demand curves D1 and D2 in the chart below. Refer to the chart you have drawn and answer the following questions:
1. When CDs sell for $18, compare the quantity demanded for CDs at demand levels D1 and D2.
2. Explain why more customers are now willing to purchase CDs for the same price.
3. When demand increases at all price levels, the demand curve shifts in which direction: right or left?
4. Explain the difference between an increase in demand and increase in the quantity demanded.
a. Which is depicted as a movement along the demand curve?
b. Which is depicted as a shift in the demand curve?
Transcribed Image Text:3:24
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Shifts on Demand Curve- Pract...
Demand Schedule for CDs
Quantity
Price per
Quantity
Demanded (D2)
Demanded
CD
(D1)
20
100
125
19
200
250
18
300
375
17
400
500
16
500
625
15
600
750
14
700
875
13
800
1000
12
900
1125
11
1000
1250
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